Lender To Pay Over $1M To Resolve Mortgage Fraud Allegations – NMP Skip to main content

Lender To Pay Over $1M To Resolve Mortgage Fraud Allegations

Keith Griffin
Jun 24, 2022
Photo credit: Getty Images/NiseriN

Former loan processor will receive $228K for whistleblower role.

American Financial Network Inc. (AFN), a mortgage lender based in Brea, Calif., has agreed to pay $1,037,145 to resolve allegations that it improperly and fraudulently originated government-backed mortgage loans insured by the Federal Housing Administration (FHA).

This case began in March 2019, when a whistleblower — a former loan processor with AFN — filed a qui tam complaint under seal in federal court in Spokane. When a whistleblower, or “relator,” files a qui tam complaint, according to the Justice Department, the False Claims Act requires an investigation of the allegations. 

The relator is generally able to then share in any recovery. Pursuant to the settlement agreement, the relator in this case will receive $228,172 of the settlement, and will also recover her attorney’s fees, expenses, and costs.

The settlement resolves allegations that between December 2011 and March 2019, AFN knowingly underwrote certain FHA mortgages and approved for insurance certain mortgages that did not meet FHA requirements or qualify for insurance, resulting in losses to the United States when the borrowers defaulted on those mortgages. The settlement further resolves allegations that AFN knowingly failed to perform quality control reviews that it was required to perform.

“FHA-backed mortgages are a critical resource for first-time homebuyers, moderate-income borrowers, and families who have suffered negative credit due to the pandemic or other events out of their control,” said Vanessa R. Waldref, the U.S. Attorney for the Eastern District of Washington. “By improperly originating ineligible mortgages, lenders take advantage of the limited resources of the FHA program and unfairly pass the risk of loss onto the public.”

Published
Jun 24, 2022
Homeward Lays Off 20% Of Staff

Alternative real estate financing company cut about 120 jobs.

Industry News
Aug 12, 2022
Lone Peak Lending Joins Panorama Mortgage Group

Names Donovan Stamps as president.

Industry News
Aug 11, 2022
Fairway Independent Mortgage Hires Former PrimeLending President

Firm says Scott Bristol is part of aggressive originator expansion.

Career
Aug 11, 2022
Mortgage Rates Jump Back Above 5%

Freddie Mac says rates recent volatility continues.

Industry News
Aug 11, 2022
Redfin: Share Of Relocating Buyers At All-Time High In July

People are looking for less expensive and better lifestyles.

Industry News
Aug 11, 2022
Redfin Expands iBuying Business To Florida

RedfinNow, which makes cash offers for homes, now operates in 34 markets in 16 states and the District of Columbia.

Tech
Aug 11, 2022