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Mortgage Lender’s $3.6M FHA Violations Settlement Could Have Been Worse


California-based Sierra Pacific Mortgage has reached a $3.6 million settlement with the U.S. government over charges it knowingly violated Federal Housing Administration lending standards. The U.S. Attorney’s office said Sierra Pacific falsely certified it complied with FHA mortgage insurance requirements for certain loans made between 2007 and 2009.

The Justice Department said Sierra Pacific submitted loans for FHA insurance that it knew did not qualify. The government, HousingWire reports, also claimed that Sierra Pacific “failed to properly respond to internal warning signs that its loans were poorly underwritten and failed to properly implement a quality control program once it was aware of those warning signs.”

The mortgage company, though, in the past could have faced much higher penalties. According to the article, the Obama administration was more aggressive in prosecuting claims of FHA fraud. When successful, the administration would also seek higher fines. For example, Wells Fargo reached a $1.2 billion settlement.

The Trump administration, however, isn’t pursuing alleged False Claims Act fraud as vigorously, according to the article. The administration has also sought smaller fines and settlements when violations are confirmed. IBERIABANK Corporation, IBERIABANK and IBERIABANK Mortgage reached an $11.7 million settlement, while Eagle Home Mortgage settled for $13.2 million, according to the article.


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