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FAR Settles with DOJ Over Alleged 2010 FCA Violations by Urban Financial

The United States Department of Justice (DOJ) announced this week that it has settled with Finance of America Reverse (FAR) to resolve allegations that FAR’s predecessor entity – Urban Financial Group – violated the False Claims Act (FCA) by knowingly originating and underwriting Home Equity Conversion Mortgage (HECM) loans insured by the Federal Housing Administration (FHA) that did not meet U.S. Department of Housing and Urban Development (HUD) requirements.

As a result of the settlement, FAR will pay $1.97 million to resolve FCA claims and an additional $500,000 to HUD to resolve its administrative liability. The settlement resolves allegations that Urban Financial, when it ordered appraisals for HECM loans prior to May 1, 2010, “used a form that provided appraisers with the loan amount and otherwise improperly communicated certain information to them in an attempt to influence the appraised value, in violation of FHA requirements,” the government said.

For its part, FAR says it is pleased to see a resolution to this matter stemming from events which took place well before the current version of the company existed.

“As the government has stated, this matter relates to origination practices occurring several years prior to Finance of America’s acquisition of Urban Financial (now known as Finance of America Reverse),” said Kristen Sieffert, president of FAR in a statement to RMD. “We are pleased to have brought this matter to a resolution and look forward to continuing to provide mortgage financing to the American public.”

The entity that would become Finance of America Holdings acquired Urban Financial in 2013, in a sale valued at $80 million. In October 2015, Sieffert was appointed company president and that December, Urban Financial officially rebranded under its current name of Finance of America Reverse.

For its part, the federal government emphasizes that this settlement should reinforce that regulators will attempt to ensure that rules and regulations are followed.

“FHA and the taxpayers rely on lenders to originate HECM loans with integrity,” said Inspector General Rae Oliver Davis of HUD.  “HUD OIG will continue to work with HUD and our law enforcement partners to ensure that FHA lenders are not engaged in unlawful practices that increase losses to HUD’s insurance funds and threaten the viability of HUD’s mortgage programs.”

As of December, 2019, FAR ranks at number 2 on a list of the top 100 reverse mortgage lenders by wholesale and retail HECM volume, tabulated by Reverse Market Insight.