PHH Corp., PHH Mortgage Corp. and PHH Home Loans have settled with the U.S. Department of Justice to settle allegations that they violated the False Claims Act by knowingly originating and underwriting mortgage loans that did not meet applicable FHA, VA, Fannie Mae and Freddie Mac requirements.
“PHH submitted defective loans for government insurance, and homeowners and taxpayers paid the price,” says Acting U.S. Attorney for the District of Minnesota Gregory Brooker. “This significant resolution helps rectify the misconduct by returning more than $74 million in wrongfully claimed funds to the government.”
Between Jan. 1, 2006, and Dec. 31, 2011, PHH certified for FHA insurance mortgage loans that did not meet HUD underwriting requirements and did not adhere to FHA’s self-reporting requirements. PHH Home Loans did not self-report any loans to HUD until 2013, after the DOJ commenced its investigation resulting in this settlement.
In addition, from at least 2005 to 2012, PHH was a VA-approved lender, originating and underwriting mortgage loans and obtaining VA loan guarantees. Also, from at least 2009 to 2013, PHH sold mortgage loans to Fannie Mae and Freddie Mac. The settlement resolves claims and potential claims against PHH that it originated loans that it submitted for guarantee by the VA and sold loans to Freddie Mac and Fannie Mae that did not meet the agencies’ requirements.
“We have agreed to resolve these matters, which cover certain legacy origination and underwriting activities, without admitting liability, in order to avoid the distraction and expense of potential litigation,” PHH said in a statement.
“While we cooperated fully in these investigations since receiving subpoenas in 2013, we concluded that settling these matters is in the best interest of PHH and its constituents.”