By Jeff Bater
Mortgage lender PHH Corp. will pay $74.5 million to settle False Claims Act allegations on faulty home loans insured by the Federal Housing Administration and Department of Veterans Affairs, and sold to Fannie Mae and Freddie Mac.
The settlement resolved allegations the Mount Laurel, N.J., company failed to comply with origination, underwriting, and quality control requirements set by the two agencies and Fannie and Freddie, the Justice Department said in a statement Aug. 8.
Justice said that between Jan. 1, 2006, and Dec. 31, 2011, PHH certified loans for FHA insurance that did not meet certain underwriting requirements, such as documenting the borrowers’ creditworthiness, as well as the FHA’s self-reporting requirements.
The government “subsequently incurred substantial losses” when it paid insurance claims after the loans defaulted, the statement said.
The settlement also resolved allegations that PHH originated and underwrote VA loans that were ineligible for the agency’s loan guarantee program, and sold loans to Freddie Mac and Fannie Mae that did not meet their requirements.
PHH agreed to resolve the matters without admitting liability. “Adhering to high legal, regulatory and ethical standards is at the core of how we conduct business, and we remain committed to serving our customers and all of our stakeholders consistent with that principle,” the company said in a statement.
The mortgage company recently won a legal victory challenging the constitutionality of the Consumer Financial Protection Bureau in a case that remains under adjudication. The CFPB had issued a $109 million disgorgement order against the company in 2015 over alleged mortgage insurance kickbacks.
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To contact the editor responsible for this story: Michael Ferullo at MFerullo@bna.com
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