Mortgage lender accused of fraud in whistleblower claim

On Behalf of | Jan 25, 2019 | Whistle-blower Claims

A former quality control manager for a Southern mortgage company says that the lender engaged in wrongful activities to increase chances that loans would be approved, according to a recent whistleblower lawsuit. The alleged scheme used several tactics, including burying information in the notes section of forms instead of the reporting section, approving unqualified borrowers and falsifying borrower documents. The goal was to boost profits for the lender in loans backed by the Federal Housing Administration.

The whistleblower first noticed abnormalities when an elderly borrower complained about be lied to by the loan officer in a reverse mortgage process, according to the lawsuit. After reviewing the files, the former quality control worker says that she found that the loan officer was not licensed in the state where the allegations arose. She claims that the paperwork was not in order and the loan officer took funds before the borrower signed documents confirming his Intent to Proceed.

The worker looked at other files and says that she found more problems. She says files had falsified documents to omit debts or adding income and savings in the records of borrowers to inflate how much money the borrowers had when applying for a mortgage loan. The originator, appraiser and loan processor in some files were related to each other, according to the lawsuit. They allegedly worked together to manipulate data to gets loans approved for unqualified borrowers.

What Is The FCA And What Role Do Whistleblowers Play?

The False Claims Act allows individuals in the private sector to bring a lawsuit on behalf of the government to recover taxpayer money that has been unlawfully attained. In many government programs, such as FHA loans, taxpayer money is at stake. The law was enacted during the Civil War to alleviate a problem concerning shoddy goods being sold to the government to be used for the troops. Today, the law applies to government contracts and programs that involve taxpayer funding. The law helps the government find evidence of fraud and recover funds.

The Department of Justice will review the allegations and may decide to intervene. If the DOJ joins in the lawsuit, federal investigators and attorneys take the lead, while the whistleblower and his or her lawyer retain vital roles in the litigation. Whistleblowers are entitled to receive a percentage of any recovery from the lawsuit.


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