U.S. Bank, a banking service company will pay $200 million to resolve allegations it violated the False Claims Act by knowingly originating mortgage loans insured by the Federal Housing Administration that did not meet underwriting requirements.
According to the complaint, U.S. Bank participated in the FHA insurance program as a direct endorsement lender with authority to originate, underwrite and certify mortgages for FHA insurance. If a loan certified for FHA insurance later defaults, the holder of the loan may submit an insurance claim to HUD for the losses resulting from the defaulted loan.
The Bank acknowledged that its conducted caused FHA to insure thousands of loans that were not eligible for insurance and that the FHA suffered substantial losses when it later paid insurance claims on those loans.
Jeff Newman represents whistleblowers.
