JPMorgan Chase to Pay $614 Million for Submitting False Claims for
FHA-insured and VA-Guaranteed Mortgage Loans
Seattle Whistleblower Attorneys and Seattle Seahawks fans announce that that
JPMorgan Chase (JPMC) will pay $614 million for violating the False
Claims Act by knowingly originating and underwriting non-compliant
mortgage loans submitted for insurance coverage and guarantees by the
Department of Housing and Urban Development’s (HUD) Federal Housing
Administration (FHA) and the Department of Veterans Affairs (VA).
As part of the settlement, which was handled by the U.S. Attorney’s Office for the Southern District of New York, JPMorgan Chase admitted that, for more than a decade, it approved thousands of FHA loans and hundreds of VA loans that were not eligible for FHA or VA insurance because they did not meet applicable agency underwriting requirements. JPMC further admitted that it failed to inform the FHA and the VA when its own internal reviews discovered more than 500 defective loans that never should have been submitted for FHA and VA insurance.
Beginning as early as 2002, JPMC falsely certified that loans it originated and underwrote were qualified for FHA and VA insurance and guarantees. As a consequence of JPMC’s misrepresentations, both the FHA and the VA incurred substantial losses when unqualified loans failed and caused the FHA and VA to cover the associated losses.
“This settlement with JP Morgan Chase will enable HUD to recover funds lost due to Chase’s past unacceptable mortgage underwriting practices,” said HUD’s Acting General Counsel Damon Smith. “In addition, Chase must now institute new and tighter controls to prevent abuses of FHA’s automated underwriting system. HUD will continue working with the Department of Justice to ensure that lenders are held accountable and are required to institute practices that will benefit both borrowers and the FHA insurance fund.”
“The agreement reached with JPMorgan Chase was possible due to the dedication of the U.S. Attorney’s Office for the Southern District of New York and the hard work of the talented staff at the Office of Inspector General,” said Inspector General of the Department of Housing and Urban Development David A. Montoya. “It also demonstrates the combined commitment of the Justice Department and the Office of Inspector General to continuing efforts to enforce FHA mortgage insurance requirements.”
The FHA’s Single Family Mortgage Insurance Program enables low- and moderate- income borrowers to purchase homes by insuring qualified loans made by participating lenders, such as JPMC, against losses if the loans later default. A participating lender may only submit to the FHA creditworthy loans meeting certain requirements and must maintain a quality control program that can prevent and correct any deficiencies in the lender’s underwriting practices. The VA’s Loan Guaranty Program provides similar assistance to veterans, service members and qualifying surviving spouses.
“I commend the efforts of the United States Attorney’s Office for the Southern District of New York to hold lenders accountable for conduct that defrauds the government and deserving veterans who rely on VA’s Loan Guaranty Program to purchase their homes,” said Acting Inspector General for the Office of Inspector General, Department of Veterans Affairs Richard J. Griffin.
The settlement resolves allegations in a complaint filed by a private whistleblower.
Source: Dept. of Justice
As part of the settlement, which was handled by the U.S. Attorney’s Office for the Southern District of New York, JPMorgan Chase admitted that, for more than a decade, it approved thousands of FHA loans and hundreds of VA loans that were not eligible for FHA or VA insurance because they did not meet applicable agency underwriting requirements. JPMC further admitted that it failed to inform the FHA and the VA when its own internal reviews discovered more than 500 defective loans that never should have been submitted for FHA and VA insurance.
Beginning as early as 2002, JPMC falsely certified that loans it originated and underwrote were qualified for FHA and VA insurance and guarantees. As a consequence of JPMC’s misrepresentations, both the FHA and the VA incurred substantial losses when unqualified loans failed and caused the FHA and VA to cover the associated losses.
“This settlement with JP Morgan Chase will enable HUD to recover funds lost due to Chase’s past unacceptable mortgage underwriting practices,” said HUD’s Acting General Counsel Damon Smith. “In addition, Chase must now institute new and tighter controls to prevent abuses of FHA’s automated underwriting system. HUD will continue working with the Department of Justice to ensure that lenders are held accountable and are required to institute practices that will benefit both borrowers and the FHA insurance fund.”
“The agreement reached with JPMorgan Chase was possible due to the dedication of the U.S. Attorney’s Office for the Southern District of New York and the hard work of the talented staff at the Office of Inspector General,” said Inspector General of the Department of Housing and Urban Development David A. Montoya. “It also demonstrates the combined commitment of the Justice Department and the Office of Inspector General to continuing efforts to enforce FHA mortgage insurance requirements.”
The FHA’s Single Family Mortgage Insurance Program enables low- and moderate- income borrowers to purchase homes by insuring qualified loans made by participating lenders, such as JPMC, against losses if the loans later default. A participating lender may only submit to the FHA creditworthy loans meeting certain requirements and must maintain a quality control program that can prevent and correct any deficiencies in the lender’s underwriting practices. The VA’s Loan Guaranty Program provides similar assistance to veterans, service members and qualifying surviving spouses.
“I commend the efforts of the United States Attorney’s Office for the Southern District of New York to hold lenders accountable for conduct that defrauds the government and deserving veterans who rely on VA’s Loan Guaranty Program to purchase their homes,” said Acting Inspector General for the Office of Inspector General, Department of Veterans Affairs Richard J. Griffin.
The settlement resolves allegations in a complaint filed by a private whistleblower.
Source: Dept. of Justice