HUD Mortgage Fraud
Fraudulent origination and underwriting of government-backed mortgages were a primary cause of the financial crisis of 2008. The federal government insures loans through the Department of Housing and Urban Development’s (HUD) Federal Housing Administration (FHA) and other government programs.
In violation of HUD regulations, banks, brokers, and lenders award sizable mortgages to individuals who do not qualify for them or cannot afford them. They profit from the origination costs and payments, and when the borrower ultimately defaults on a home they cannot afford, their losses are recouped from the federal government.
Every one of these defaults and the resulting loan payoffs is a False Claims Act violation because the lender should never have awarded the mortgage in the first instance. Our attorneys represented the whistleblowers in a False Claims Act case against Taylor Bean & Whitaker and Home America Mortgage, a lender and originator, which settled similar charges for more than $320 million.
Another type of mortgage fraud occurs when lenders charge hidden, unallowable fees to borrowers under certain programs, such as the Department of Veterans Affairs loan guaranty program.