Lender based in Indian Land, South Carolina movement hostage agreed to pay $23.75 million to settle allegations that it improperly originated and underinsured mortgagees. federal housing administration (FHA) and department of veterans affairs (VA) program.
Thank you for reading this post, don't forget to subscribe!The Justice Department’s settlement announcement on Thursday resolves a whistleblower lawsuit filed in 2018 by former underwriter Jennifer McNeil and former quality control team chief Ledell Javon Wilson in a federal court in the Northern District of New York under provisions of the False Claims Act.
In a statement, the Movement said, “The US attorney noted that we took ‘significant measures to stop the practices, both before and after we were informed of the United States investigation,’ and that the settlement ‘excludes any legal liability. There is no confession.
According to the company statement, “The relevant loans, some of which are 15 years old, account for less than half a percent of our total federal loans originated during this time frame. We believe we have resolved these issues and have agreed to a settlement so that we can move forward and focus on our mission.
Like its peers, the Movement has the authority to initiate and underwrite loans without government review. If the borrowers default, they can submit a claim to the government for some of the damages. Therefore, lenders must follow FHA and VA regulations to ensure that only loans that meet credit and underwriting criteria are insured or guaranteed by the government.
According to the whistleblowers’ lawsuit, Movember’s inexperienced underwriting staff routinely made fundamental errors related to borrowers’ income, debt and assets calculations. The lawsuit claims that a former quality control underwriter estimated that approximately 20% of government loan files audited by the movement after endorsement had material deficiencies.
“Lenders participating in taxpayer-backed mortgage programs must comply with rules designed to protect both the integrity of the program and the protection of homeowners,” U.S. Attorney Carla Friedman said in a statement. “Today’s settlement holds Movement Mortgage accountable for its past violations, while acknowledging that it has taken steps to strengthen its internal controls to ensure future compliance with FHA and VA requirements.”
The Movement acknowledged that it had sent out “a significant percentage of loans” that did not meet the requirements to be eligible for the programs—and that the FHA and VA programs would not have insured or guaranteed these loans, but had erroneous certifications. For submission, the US Attorney’s Office said.
The company also confirmed that it failed to comply with self-reporting requirements of the government.
The Movement will pay $4 million to the two former employees for their share of the settlement proceeds, and the rest will go to the government. The law allows a private party to file a lawsuit on behalf of the government and receive a portion of any recovery.
“Through this settlement, Movement Mortgage is accepting responsibility for its past actions by fully repaying the FHA Insurance Fund for its losses on defaulted loans that should not have been issued,” said Damon Smith, general counsel for Department of Housing and Urban Development (HUD) said in a statement. The FHA is part of the HUD.
According to the US Attorney’s Office, the covered conduct extended through July 2008, including a period of rapid expansion by the company. However, the settlement agreement indicates that since 2018, Movement has implemented measures to improve its operations and quality controls.
Nelson Thomas, Founder Thomas & Solomon LLP Representing whistleblowers, it is often said that individuals – particularly underwriters and quality control staff – feel powerless in a mortgage industry where it is “generally expected that fraud will occur.”
“Today’s settlement is proof that individuals like Jennifer and Jevon can make a difference in stopping this fraud. For each of them, it was never about the whistleblower award; It was just about doing the right thing and trying to change things.
The movement’s case comes after a settlement by the Justice Department academy mortgage $38.5 million in December 2022 and guild hostage in October 2020 for $24.9 million.
