MetLife Home Loans LLC has agreed to pay the United States $123.5 million to resolve alleged Federal Housing Administration (FHA) mortgage lending violations, the Department of Justice recently announced.
The violations did not involve reverse mortgage loans, the Department of Justice confirmed.
Mortgage finance company MetLife Home Loans is the successor to MetLife Bank N.A, and is paying the amount to resolve allegations against MetLife Bank.
Bridgewater, N.J-based MetLife Bank was a banking services company that in June 2013 merged into MetLife Home Loans, headquartered in Irving, Texas. MetLife Bank was, and MetLife Home Loans is, a wholly owned subsidiary of MetLife Inc. (NYSE: MET), a holding company headquartered in New York City.
MetLife Inc. closed its reverse mortgage business, selling its reverse mortgage servicing portfolio to Nationstar Mortgage, in 2012.
MetLife Bank allegedly violated the the False Claims Act by knowingly originating and underwriting mortgage loans insured by the U.S. Department of Housing and Urban Development’s (HUD) FHA that did not meet applicable requirements, according to the Office of Inspector General.
“MetLife Bank’s improper FHA lending practices not only wasted taxpayer funds, but also inflicted harm on homeowners and the housing market that lasts to this day,” said Acting Assistant Attorney General Joyce R. Branda of the Justice Department’s Civil Division, in a statement.
As part of the settlement, MetLife Home Loans admitted that from September 2008 through March 2012 it repeatedly certified for FHA insurance mortgage loans that did not meet HUD underwriting requirements, said the Department of Justice, adding that MetLife Bank was aware that a “substantial percentage” of these loans were not eligible for FHA mortgage insurance due to its own internal quality control findings.
According to these findings, between January 2009 and August 2010, the portion of MetLife Bank loans containing the most serious category of deficiencies, which MetLife Bank called “material/significant,” ranged from 25% to more than 60%, the Department of Justice said.
Quality control findings were allegedly routinely shared with MetLife Bank’s senior managers, including the chief executive officer and board of directors.
“We appreciate that MetLife Bank has accepted responsibility for its actions and is settling with the government,” said General Counsel Helen Kanovsky of HUD.
Written by Cassandra Dowell