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SAN DIEGO (CNS) – A San Diego-based mortgage lender has agreed to pay nearly $ 25 million to resolve allegations it knowingly approved ineligible loans which then defaulted, resulting in mortgage insurance claims from from the Federal Housing Administration, the Justice Department said Thursday. .

Guild Mortgage Company, which is headquartered in San Diego and has branches across the country, allegedly violated the False Claims Act by knowingly violating the program’s material requirements while creating and underwriting FHA-insured mortgages.

According to the Justice Department, participants in the FHA mortgage insurance program, such as Guild, can create and guarantee mortgages without the government first reviewing the loans to ensure they comply with FHA underwriting and creation requirements. If the loan defaults, loan holders can recoup some losses from the United States, according to the DOJ.

The settlement resolves allegations that the Guild approved ineligible loans, failed to follow substantive program rules that require lenders to maintain quality control, and failed to report loans with material deficiencies it identified.

“The Federal Housing Administration’s insurance program is an essential tool in helping hard-working Americans achieve their dream of homeownership. Any abuse of this program is unacceptable and the bad actors will be held accountable, ”said Rae Oliver Davis, Inspector General of the US Department of Housing and Urban Development.

According to the DOJ, the settlement resolves allegations made by former Guild quality control chief Kevin Dougherty, who sued under the whistleblower provisions of the False Claims Act, which allows private parties to sue on behalf of the government for false claims.

Dougherty will receive $ 4,980,000 from settlement funds, the DOJ said.

“As this regulation demonstrates, we are committed to holding mortgage lenders accountable when they choose to abuse the integrity of vital government programs designed to help homeownership,” said US Attorney Robert Brewer . “We also commend the whistleblower for demonstrating, exposing these wrongs and working with the government’s investigative team.”


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