Freedom Mortgage Corp. has agreed to settle for more than $100 million allegations it falsely certified government-insured mortgages over a five-year period.
The
Mount Laurel, New Jersey-based organization was approved by the Federal Housing Administration as a direct endorsement lender from 2006 to 2011.
Around 2008, Freedom Mortgage significantly increased its FHA loan production. But it failed to make corresponding increases to its quality control staff.
That is according to an announcement Friday from the Department of Justice.
As a result,
Freedom Mortgage was unable to perform FHA-required QC work.
During one two-month period, 347 files didn’t meet the Department of Housing and Urban Development’s QC requirements.
But between 2006 and 2011, Freedom Mortgage didn’t report a single loan to HUD.
It also failed to share early payment default data with production and underwriting personnel.
In 2012, the lender embarked on a project to identify loans that should have been self-reported to HUD. Although it identified hundreds of files, it only reported one.
During this time, Freedom Mortgage was certifying that loans met FHA requirements.
The company’s actions violated the False Claims Act, according to the Justice Department.
The Justice Department indicated that Freedom Mortgage has agreed to settle the allegations for $113 million.
“The settlement announced today resolves allegations that Freedom Mortgage Corp. failed to comply with certain FHA origination, underwriting and quality control requirements,” the statement said.
Freedom Mortgage is one of many FHA mortgagees to recently settle similar allegations.
