United States sues mortgage lender for fraud in home loan program

by Ben Vernia | October 20th, 2020

On September 25, the Department of Justice announced that it had filed a civil complaint under FIRREA and the False Claims Act against a mortgage lender. According to DOJ’s press release:

The United States has filed a complaint under the Financial Institutions Reform, Recovery and Enforcement Act of 1989 and the False Claims Act against Nutter Home Loans, f/k/a James B. Nutter & Co. (Nutter), for forging certifications and using unqualified underwriters to approve Federal Housing Administration (FHA) insured Home Equity Conversion Mortgages (HECM), the Department of Justice announced today. 

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The FHA, part of the U.S. Department of Housing and Urban Development (HUD), offers numerous mortgage insurance programs intended to help build and sustain strong communities across America.  The HECM program is a reverse mortgage program specifically for senior homeowners age 62 and older.  The program allows seniors to access the equity in their residences, and thereby age in place in their family home, through a mortgage agreement with a lender that is insured against loss by the FHA.  The United States’ complaint alleges that in order to significantly increase its loan production, Nutter used unqualified underwriters lacking the requirements established by HUD to review and approve HECMs that Nutter ultimately insured with the FHA.  Moreover, on other loans, Nutter forged the signatures of qualified underwriters to make it appear that a qualified underwriter had reviewed and approved the loan. 

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The case apparently arose from a government investigation, and not from a qui tam complaint filed by a whistleblower.

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