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Business Crimes Hotline
NEW YORK
False Certifications for Mortgage Loans Result in $614 Million FCA Settlement
On Feb. 4, the Department of Justice (DOJ) announced that JPMorgan Chase (JPMC), the New York-based financial services company, had agreed to a $614 Million settlement of False Claims Act (FCA) allegations initiated by an undisclosed whistleblower, in connection with mortgage loans issued by the company dating back to 2002. The loans at issue were submitted by JPMC for insurance backing by the Department of Housing and Urban Development's (HUD) Federal Housing Administration(FHA) and the Department of Veterans Affairs (VA).
Both the FHA and VA insure loans for lower income borrowers against default, to assist those borrowers in becoming homeowners. Lenders participating in these programs can only submit loans to FHA and VA that meet each agency's specific credit-worthiness requirements. Further, lenders must maintain quality control programs governing this process. As part of its settlement, JPMC admitted to falsely certifying hundreds of VA loans and thousands of FHA loans over a more than 10-year span. Additionally, the company admitted that it had conducted internal reviews identifying more than 500 such loans, but failed to inform the Government of its findings. In announcing the settlement, Preet Bharara, United States Attorney for the Southern District of New York, criticized the company while also noting its ultimate acceptance or responsibility:
“For years, JPMorgan Chase has enjoyed the privilege of participating in federally subsidized programs aimed at helping millions of Americans realize the dream of homeownership” ' “Yet, for more than a decade, it abused that privilege. JPMorgan Chase put profits ahead of responsibility by recklessly churning out thousands of defective mortgage loans, failing to inform the government of known problems with those loans and leaving the government to cover the losses when the loans defaulted. With today's settlement, however, JPMorgan Chase has accepted responsibility for its misconduct and has committed to reform its business practices.”'
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False Certifications for Mortgage Loans Result in $614 Million FCA Settlement
On Feb. 4, the Department of Justice (DOJ) announced that
Both the FHA and VA insure loans for lower income borrowers against default, to assist those borrowers in becoming homeowners. Lenders participating in these programs can only submit loans to FHA and VA that meet each agency's specific credit-worthiness requirements. Further, lenders must maintain quality control programs governing this process. As part of its settlement, JPMC admitted to falsely certifying hundreds of VA loans and thousands of FHA loans over a more than 10-year span. Additionally, the company admitted that it had conducted internal reviews identifying more than 500 such loans, but failed to inform the Government of its findings. In announcing the settlement, Preet Bharara, United States Attorney for the Southern District of
“For years,
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