The parent of United Wholesale Mortgage has agreed to settle allegations that it pressured and compensated underwriters to approve government-insured mortgages.
United Shore Financial Services LLC has reached a settlement tied to False Claims Act violations in making loans insured by the Federal Housing Administration.
According to the Department of Justice, the Troy, Michigan-based firm knowingly originated and underwrote FHA-insured loans that didn’t meet FHA requirements.
From January 2006 through December 2011, the Justice Department claims United Shore improperly pressured underwriters to approve FHA loans. Its compensation plan used a formula expressly tying underwriter compensation to the percentage of loans approved by the underwriter and closed.
The company also
falsely certified that direct endorsement underwriters personally reviewed appraisal reports prior to approving and endorsing them.
In addition, even though United Shore’s internal quality control reviews uncovered
severe problems with FHA-insured mortgages, the lender routinely failed to provide any meaningful information to senior management about the findings.
Furthermore, United Shore failed to self report its findings to the Department of Housing and Urban Development. While it identified hundreds of materially-deficient FHA insured loans, it only self-reported only three loans to HUD.
The Justice Department also alleges that after a government investigation was launched, United Shore
made certain discretionary distributions to a shareholder.
The settlement — which resulted from a joint investigation conducted by HUD, HUD’s Office of Inspector General and the Justice Department — will cost United Shore $48 million.
United Shore shut down its retail lending operations in 2014.
