Flagstar Bancorp, Inc. agrees to pay up to $140.8 million to settle False Claims Act allegations that Flagstar improperly endorsed federally-insured mortgage loans that eventually defaulted and falsely certified its loan underwriting practices to federal housing authorities.
About the Flagstar False Claims Act Whistleblower Lawsuit
The United States Department of Justice (US DOJ) filed a complaint and settlement in New York federal court accusing Flagstar of violations in the Direct Endorsement Lender program (DEL Program). The DEL Program is a program run by the Federal Housing Administration (FHA) that authorizes private mortgage lenders to approve loans for FHA Insurance.
Under the DEL Porgram, registered underwriters are required to conduct due diligence on loans before endorsing them for FHA insurance. A registered underwriter is an underwriter with at least three years of full-time experience.
Flagstar’s Wrongful Conduct Prompted A False Claims Whistleblower Lawsuit And Whistleblower Settlement
Instead of using registered underwriters, Flagstar used their own self-designated “underwriting assistants” to perform the due diligence required prior to endorsing the loan for FHA insurance. These “underwriting assistants” lacked the proper qualifications to endorse loans for FHA insurance.
A whistleblower reported Flagstar’s practice of using under-qualified “underwriting assistants” to endorse loans for FHA insurance, and the US DOJ subsequently brought the whistleblower lawsuit that Flagstar agreed to settle for $133 million. In addition to the $133 million Flagstar is required to pay, Flagstar has agreed to remain in full compliance with the DEL Program.
Each lawsuit is unique, however, in situations like this under the False Claims Act, it is typical for the whistleblower to receive between 10% and 40% of the amount recovered by the US DOJ.
How To Recover As A Whistleblower
If you or someone you know has witnessed wrongful conduct, such as the conduct described above, or know of a company submitting false claims to Government agencies, you are encouraged to contact our experienced Whistleblower Lawyers and False Claims Act Attorneys to properly file a claim with the appropriate Government agency. You may contact Gilman Law LLP by calling toll free at (888) 252-0048 or completing our free consultation form online for a free and confidential case review.