Feds Fine Sierra Pacific Mortgage $3.67 Million For FHA Lending Violations Under False Claims Act
The USAO alleges Sierra Pacific Mortgage violated the False Claims Act. They alleged the company falsely certified that it complied with FHA mortgage insurance requirements between 2007 and 2009.
Sierra Pacific Mortgage acted as a “direct endorsement lender” in the FHA insurance program. Direct endorsement lenders have the authority to originate, underwrite and endorse mortgages for FHA insurance without approval from the FHA.
The program allows lenders to bypass the FHA approval process to endorse loans for FHA insurance.
The USAO alleged Sierra Pacific submitted loans for FHA insurance that it knew did not qualify. The government also claimed that Sierra Pacific failed to properly respond to internal warning signs that its loans were poorly underwritten.
After an investigation began in 2013 and escalated in 2016. Both the USAAO and Sierra Pacific Mortgage agreed to a settlement. However, Sierra Pacific Mortgage will not admit to liability in the matter.
With the settlement, Sierra Pacific becomes the latest in a long string of lenders that settled with the government under the auspices of the False Claims Act.
Trump Goes Easy On Lenders Accused Of Defrauding The Government
Trump administration has certainly deviated from the Obama Administration with the size of the fines the government has collected under the False Claims Act.
It’s Sierra Pacific Mortgage’s turn to pay a paltry fine of $3.67 million.
HUD General Counsel Paul Compton said in a statement: