Freedom Mortgage in $113M FHA Settlement – NMP Skip to main content

Freedom Mortgage in $113M FHA Settlement

Apr 15, 2016
Another day, another federal settlement with a mortgage company: The U.S. Department of Justice (DOJ) announced that Mount Laurel, N.J.-based Freedom Mortgage Corporation will pay a $113 million penalty to resolve charges that it violated the False Claims

Another day, another federal settlement with a mortgage company: The U.S. Department of Justice (DOJ) announced that Mount Laurel, N.J.-based Freedom Mortgage Corporation will pay a $113 million penalty to resolve charges that it violated the False Claims Act by knowingly originating and underwriting single-family mortgage loans that did not meet the requirements of the Federal Housing Administration (FHA) insurance program.

The federal government’s charges involve loans originated between 2006 and 2011, with allegations that Freedom Mortgage failed to follow the FHA’s quality control requirements. The company is also charged with dereliction in its early payment default quality control review process between 2006 and 2008.

“Freedom Mortgage did not properly comply with FHA rules for the mortgages it was generating and did not adequately monitor early payment defaults,” said U.S. Attorney Paul J. Fishman for the District of New Jersey. “It also failed to report to HUD the defaults it did discover, as required by its participation in the program. Today’s settlement recognizes those failures and imposes an appropriate sanction.”

Freedom Mortgage made no public comments on the settlement.

About the author
Published
Apr 15, 2016
Insuring The Risk To Lenders At Closing

Traditional protections like title insurance and closing protection letters may leave lenders exposed to significant settlement, funding, and fraud-related losses

CHLA Uses Trump Mortgage Order To Renew Push For LO Comp Reform

Community lenders want more flexibility over employee compensation, closing-cost estimates, down payment assistance, and federal supervision of smaller IMBs

Servicers Begin Testing Systems Ahead of VA Partial Claim Deadline

VA lenders and servicers have until Nov. 28 to implement the new loss mitigation waterfall and Partial Claim Program

ROAD Act’s Housing Incentive May Be Too Small To Move Supply

Realtor.com finds the median city risks losing only about $84,000, although the policy could carry more weight in supply-starved Northeast and Midwest markets

CRA Proposal Could Reshape Bank Lending And Affordable Housing Investment

The OCC and FDIC would put more weight on lending while easing community development requirements for hundreds of banks

Fannie Mae AI Governance Deadline Arrives Aug. 6

Seller/servicers using artificial intelligence in origination or servicing must have formal policies, oversight, and vendor controls in place