Alleged violations of Federal Housing Administration underwriting standards on dozens of mortgages have prompted U.S. Bank to agree to a more than $1 million settlement.
The agreement was announced Friday by the Department of Housing and Urban Development.
A 2006 audit conducted by HUD’s Office of Inspector General found that the Minneapolis-based bank did not meet FHA underwriting standards on 27 mortgages originated in 2003 and 2004.
The bank allegedly refinanced the loans, using the proceeds to pay overdue principal, interest and late charges — something that is generally prohibited by FHA.
Another alleged violation was U.S. Bank’s submission of delinquent loans for late endorsement — another prohibited practice. FHA requires loans to be current when they are submitted for endorsement more than 60 days after closing.
Losses to FHA on the loans reportedly exceeded $465,000.
The agreement with HUD calls for U.S. Bank — the eighth-biggest FHA lender — to pay $1.2 million.
U.S. Bank, which didn’t admit any liability, didn’t immediately respond to a request for a statement.