U.S. Bank has agreed to a settlement under which it will pay $200 million to resolve allegations regarding Federal Housing Administration loans that did not meet agency requirements.
The company was in violation of the False Claims Act when it knowingly originated and underwrote those loans that did not meet the program requirements, according to the Department of Justice, which announced the settlement this week.
“By misusing government programs designed to maintain and expand homeownership, U.S. Bank not only wasted taxpayer funds, but inflicted harm on homeowners and the housing market that lasts to this day,” said Assistant Attorney General for the Justice Department’s Civil Division Stuart F. Delery. “As this settlement shows, we will continue to hold accountable financial institutions that violate the law by pursuing their own financial interests at the expense of hardworking Americans.”
The bank’s underwriting led to foreclosures and loss of government funds, the DOJ said, noting U.S. Bank’s violations during its participation as a direct endorsement lender in the FHA insurance program.
The violations allegedly took place from 2006 to 2011, during which U.S. Bank, as a direct endorsement lender, certified loans for FHA insurance, which later defaulted.
U.S. Bank has admitted to the false certifications and to its quality assurance program not meeting FHA requirements, which resulted in loan deficiencies and failures in reporting.
“We are gratified that U.S. Bank has agreed to put this matter behind it, and we want to thank the Department of Justice and HUD’s Office of Inspector General for all of their efforts in helping us make this settlement a reality,” said Damon Smith, Acting General Counsel for the U.S. Department of Housing and Urban Development in a statement. “This settlement underscores our consistent message that following Federal Housing Administration rules for underwriting FHA-insured loans is a requirement, not an option.”
Written by Elizabeth Ecker