Mort­gage firm to pay $74M in FHA case

Northwest Arkansas Democrat-Gazette - - BUSINESS & FARM -

MIN­NEAPO­LIS — Fed­eral pros­e­cu­tors in Min­nesota say fi­nan­cial ser­vices firm PHH Corp. and two sub­sidiaries have agreed to pay more than $74 mil­lion to set­tle al­le­ga­tions they vi­o­lated stan­dards for un­der­writ­ing gov­ern­ment-backed mort­gages.

Act­ing U.S. At­tor­ney for Min­nesota Gre­gory Brooker said in a state­ment Tues­day that Mount Lau­rel, N.J.-based PHH, named for its three founders, sub­mit­ted de­fec­tive loans for gov­ern­ment in­sur­ance, and that home­own­ers and tax­pay­ers paid the price.

The set­tle­ment in­cludes $65 mil­lion for vi­o­la­tions in­volv­ing loans in­sured by the Fed­eral Hous­ing Ad­min­is­tra­tion, and nearly $9.5 mil­lion for loans guar­an­teed by the Depart­ment of Veter­ans Af­fairs. The gov­ern­ment said it in­curred “sub­stan­tial losses” in pay­ing in­sur­ance claims on the FHA loans. About $9 mil­lion will go to a whistle­blower who for­merly worked for PHH.

PHH says it set­tled without ad­mit­ting li­a­bil­ity to avoid the dis­trac­tion and ex­pense of lit­i­ga­tion.

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