M&T Bank Corp. will pay the federal government $64 million to resolve allegations that the bank failed to comply with certain Federal Housing Administration mortgage loan origination, underwriting and quality control requirements.
The Justice Department alleged the Buffalo-based bank violated the False Claims Act by knowingly originating and underwriting mortgage loans insured by the FHA that did not meet applicable requirements.
“Mortgage lenders that fail to follow FHA program rules put taxpayer funds at risk and increase the chances of borrowers losing their homes,” said principal deputy assistant attorney general Benjamin C. Mizer, head of the Justice Department’s civil division, in a statement. “We will continue to hold lenders accountable for knowingly submitting ineligible loans for FHA insurance.”
James P. Kennedy Jr., first assistant U.S. Attorney for the Western District of New York, said: “M&T bypassed its responsibility to originate and underwrite mortgages in accordance with the standards required by the FHA. This case demonstrates that when a financial institution takes such a detour, we will work to ensure that it does not bypass the consequences of that conduct.”
M&T spokesman C. Michael Zabel said the bank “made a business decision to settle this matter, without admitting liability, in order to avoid the expense of potential litigation.
“As we have also previously disclosed, this settlement will not have a material impact on our financial condition or results of operations,” Zabel said. “We are the 16th mortgage lender to settle such claims, which relate to matters that went back as far as 10 years. Looking forward, we will continue as a leading and responsible provider of home loans in the communities we serve, including as a FHA program participant.”
M&T in a regulatory filing last year disclosed settlement talks related to the investigation were under way.
The Justice Department said the allegations resolved by the settlement arose from a whistleblower lawsuit filed under the False Claims Act by a former M&T employee, Keisha Kelschenbach. Under the act, private citizens can sue on behalf of the government and share in any recovery. The Justice Department said the share to be awarded in this case has not been determined.
