A lawsuit alleging that IBERIABANK Corp. made false claims on residential loans that are insured by the Federal Housing Administration has been settled for nearly $12 million.
A federal whistleblower lawsuit was filed in 2015 against IBERIABANK under the False Claims Act by former employees Kelley R. Shackleford and Karen Mills.
The lawsuit alleges that the
Lafayette, Louisiana-based firm certified that loans were eligible for FHA insurance between Jan. 1, 2005, and Dec. 31, 2014, even though they weren’t.
Loans allegedly had inadequate documentation for income and downpayments as well as unresolved appraisal discrepancies.
IBERIABANK is also accused of paying incentives to underwriters — something not allowed by the Department of Housing and Urban Development. The financial institution allegedly advised HUD in 2010 that it stopped making the payments even though it continued to do so until 2014.
In addition, the bank is accused of failing to self-report material violations of HUD requirements in a timely fashion.
“As a result of IBERIABANK’s conduct and omissions, HUD insured loans approved by the bank that were not eligible for FHA mortgage insurance under the DE Program and that HUD would not otherwise have insured,” a news release Friday from the Department of Justice, which intervened in the case, said. “HUD subsequently incurred losses when it paid insurance claims on those loans.”
The Justice Department said that IBERIABANK Corp., IBERIABANK and IBERIABANK Mortgage Co. agreed to settle the lawsuit for $11.692 million.
The whistle blowers will receive 20 percent of the settlement.
