Tuesday
October 21, 2014

JPMorgan to Pay $614M for Faulty FHA, VA Loans

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JPMorgan to Pay $614M for Faulty FHA, VA Loans

The Department of Justice is accusing lending giant JPMorgan Chase of approving thousands of loans for the Federal Housing Administration and Veterans Affairs that should not have been eligible for federal insurance.

JPMorgan Chase has agreed to pay $614 million for violating the False Claims Act for originating and underwriting non-compliant mortgages submitted for insurance coverage and guarantees by the FHA and VA, The Department of Justice reports.

“The resolution announced today is a product of the Justice Department’s continuing efforts to hold accountable those whose conduct contributed to the financial crisis,” says Associate Attorney General Tony West. "This settlement recovers wrongfully claimed funds for vital government programs that give millions of Americans the opportunity to own a home and sends a clear message that we will take appropriately aggressive action against financial institutions that knowingly engage in improper mortgage lending practices."

In the JPMorgan case, misrepresentations on FHA and VA loans allegedly began in 2002, according to DOJ records. The DOJ says that FHA and VA faced big losses when these loans defaulted.

HUD Acting General Counsel Damon Smith says that JPMorgan will be required to institute “new and tighter controls” to prevent any future abuses of FHA’s automated underwriting system.

Source: The Department of Justice and “JP Morgan Admits it Wrongfully Filed FHA and VA Mortgages,” HousingWire (Feb. 5, 2014)

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