The Department of Justice (DoJ) announced today that it has recovered $15.06 million with the help of a whistleblower, resolving allegations that a national originator and underwriter of mortgages violated the False Claims Act (FCA) and other federal laws and regulations.
Under various federal programs some mortgages may be insured by the Federal Housing Administration (FHA) or guaranteed by the Department of Veterans Affairs (VA). Companies that originate or underwrite these loans may submit claims to the government when borrowers default. However, these government agencies require companies to follow specific rules and regulations to participate in the program.
According to the DoJ’s press release, as part of the settlement the company “admitted that it failed to adhere to the applicable self-reporting requirements, that its FHA underwriters received commissions and gifts in violation of program rules, and that there were instances in which its government underwriters were instructed not to review documents that were relevant to the underwriting decision.”
The FCA allows whistleblowers who uncover fraud against the government to file lawsuits on behalf of the government and share in any recovery. The whistleblower in this case will be awarded nearly $2.4 million for bringing the alleged fraud to light.
In addition to allowing whistleblowers a share in the recovery, the FCA also provides whistleblowers with important protections against retaliation.
The settlement discussed above is based on allegations only. No determination of liability has been made.