A pair of Utah mortgage firms have agreed to settle for nearly $10 million allegations they violated the False Claims Act on government-insured loans.
Both companies have been approved as Direct Endorsement Lenders for the Federal Housing Administration insurance program since at least 2006.
The lenders, which are both based in Salt Lake City, are accused of
knowingly originating and approving FHA loans that didn’t meet applicable requirements.
The first, Primary Residential Mortgage Inc., didn’t document assets used to qualify a borrower, according to an announcement from the Department of Justice.
PRMI also allegedly omitted liabilities from loan qualification, didn’t document income and failed to verify the borrower’s earnest-money deposit.
In addition, the borrower was delinquent on another existing FHA-insured mortgage.
PRMI
agreed to settle the allegations for $5 million.
A statement from PRMI indicated that it
fully cooperated with the government inquiry and agreed to the settlement “to avoid the expense, uncertainty and inconvenience of litigation.”
PRMI added, “This settlement does not affect PRMI’s HUD approved mortgage status. PRMI will continue to offer FHA-insured loans.”
The second company,
SecurityNational Mortgage Co., allegedly endorsed a loan where the borrower was past-due on federal debt and had an unpaid court-ordered judgment.
The loan SecurityNational refinanced into an FHA mortgages was delinquent four months, the Justice Department said.
The new loan exceeded the Department of Housing and Urban Development’s maximum loan-to-value ratio.
In addition, SecurityNational allegedly failed to document income and failed to analyze the borrower’s delinquent credit history.
SecurityNational agreed to settle the allegations for $4.25 million.
“Both PRMI and SecurityNational admitted they certified loans for FHA mortgage insurance that did not meet HUD underwriting requirements regarding borrower creditworthiness and eligibility,” the Justice Department stated.
