Regions bank next on doj hit list, will pay $52.4 million for fha-lending violations _ 2016-09-13 _ housingwire

Over the last few years, the Department of Justice used the False Claims Act as its weapon of choice against the mortgage industry, using the law, which is designed to prosecute vendors the government feels fraudulently represented themselves while doing business with the nation, to extract settlements from lenders for supposedly misrepresenting the quality of loans to the Federal Housing Administration.

In recent months, Wells Fargo agreed to a $1.2 billion settlement, while Franklin American settled with the government for $70 million, Walter Investment settled for $29.6 million, First Tennessee, the regional bank for First Horizon National, settled for $212.5 million, M&T Bank settled for $64 million, and Freedom Mortgage agreed to pay $113 million – all for False Claim Act violations.

That list doesn’t include Quicken Loans or Guild Mortgage, both of which are fighting back after being accused of similar actions by the DOJ.

According to an announcement from the DOJ, the settlement with Regions Bank resolves allegations that the bank violated the False Claims Act by “knowingly originating and underwriting mortgage loans insured by the Department of Housing and Urban Development’s Federal Housing Administration that did not meet applicable requirements.”

As with several of the other companies, Regions Bank acted as a “direct endorsement lender” in the FHA insurance program, which grants the lender the authority to originate, underwrite and endorse mortgages for FHA insurance without prior approval from the FHA.

Under the direct endorsement lender program, the FHA does not review a loan for compliance with FHA requirements before it is endorsed for FHA insurance.

While not admitting liability, the bank did admit that between Jan. Direct insurance tennessee 1, 2006, and Dec. One quote direct car insurance 31, 2011, Regions Bank certified for FHA insurance certain mortgage loans that did not meet certain HUD underwriting requirements regarding borrower creditworthiness.


Additionally, the DOJ said that Regions did not maintain a quality control program that fully complied with the requirements established by HUD. Auto direct insurance services “Regions’ QC Department did not consistently review an adequate sample of FHA-insured loans,” the DOJ said.

According to the DOJ, when Regions’ QC Department identified deficiencies during its loan review, the bank engaged in a pattern of “curing” QC findings by obtaining documentation that was not available to the underwriter at the time the loan was approved. Canadian insurance direct “As a result, the defect rate reported to senior management was understated,” the DOJ said.

“Additionally, Regions did not fully adhere to HUD’s self-reporting requirements. Direct auto insurance headquarters During the period between Jan. Nevada direct insurance company 1, 2006, and Dec. Dial direct online insurance quote 31, 2011, the HUD Handbook required lenders to report ‘findings of fraud’ or ‘other serious violations’ or ‘serious material deficiencies’ to HUD,” the DOJ said. Direct life insurance company “Although Regions’ monthly QC reviews identified numerous FHA-insured loans for that period that contained material deficiencies, Regions did not begin self-reporting these materially deficient loans to HUD until 2011.”

As a result of Regions’ “conduct and omissions,” HUD insured hundreds of loans that were not eligible for FHA mortgage insurance under the DEL program and that HUD would not otherwise have insured, the DOJ said.

“Mortgage lenders that participate in the FHA insurance program must follow the requirements intended to safeguard its integrity and to protect homeowners,” said Principal Deputy Assistant Attorney General Benjamin Mizer, head of the Justice Department’s Civil Division. “We will continue to hold responsible lenders that knowingly violate these important requirements.”

In a statement, Regions said that it “fully cooperated” with the DOJ inquiry and agreed to the settlement, again “without admitting liability,” to avoid further legal expense.

“Regions is pleased to resolve this inquiry and is committed to maintaining fair, consistent and accurate loan origination practices,” Regions said in a statement.

While other state and federal regulatory bodies overlap in their regulation of the mortgage industry, the very particular consumer focus of the CFPB is not duplicated by any other body. Direct auto insurance no credit check Will deregulation mean a return to the Wild West lending atmosphere that led to the financial crisis? What happens next? We asked John Socknat, partner at Ballard Spahr, to weigh in on what mortgage lenders and servicers can expect from a Trump administration.

The marketplace is full of hard and private money lenders — it will come down to who can best assist investors in completing their goals, whether that be by providing quicker close times, or with more accurate valuations. Quinn direct car insurance number With how many options there are for borrowers, lenders will need to start competing for marketshare as borrowers shop their situations to multiple lenders, leveraging the offers against each other. Direct auto insurance 1800 number This process will force lenders to update their guidelines, or be forced out of the market.

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