On March 31, 2020, the U.S. Department of Justice (DOJ) announced that it had entered into a $2.47 million settlement agreement with a national reverse mortgage lender in order to resolve allegations that the bank’s predecessor entity had failed to meet the Department of Housing and Urban Development’s (HUD) criteria in originating and underwriting Home Equity Conversion Mortgages (HECM) insured by the Federal Housing Administration.
Under the settlement, the lender will pay $1.97 million to resolve alleged False Claims Act violations, and $500,000 to HUD to resolve administrative liability. The settlement concerned HECM loans originated prior to May 1, 2010. The appraisal order forms used by the lender included the loan amount, which the DOJ alleged was an improper attempt to influence the appraised value. The lender did not admit to liability as part of the settlement agreement.
