Mortgage lender PHH Corp. will pay nearly $74.5 million to resolve claims that it failed to comply with certain origination, underwriting and quality control requirements from the Federal Housing Administration (FHA), the U.S. Veterans Affairs Department, Fannie Mae and Freddie Mac. A whistle-blower lawsuit was filed under the False Claims Act (FCA) by a PHH employee, According to federal prosecutors, the employee will receive almost $9.1 million from the settlement.
The Justice Department said that from 2006, to 2011, PHH certified ineligible home loans for FHA insurance. If a mortgage loan approved for FHA insurance later defaults, the holder of the loans may subit an insurance claim to the office of Housing and Urban Development (HUD), FHA’s parent agency for the losses resulting from the defaulted loan. The government suffered significant losses after it paid insurance claims on the loans certified by PHH.
Between 2005 and 2012, PHH submitted ineligible loans to be guaranteed for coverage through a Veterans Affairs Department program that helps members of the military and veterans become homeowners, according to the Justice Department. PHH also originated and sold ineligible loans form 2009 to 2013 to Fannie Mae and Freddie Mac.
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