Academy Mortgage Corporation (Academy), a mortgage lender based in Draper, Utah, has agreed to pay $38.5 million to settle allegations that it violated the False Claims Act by improperly originating and underwriting mortgages insured by the Federal Housing Administration. The allegations allege that Academy Mortgage Corporation (Academy) submitted false claims to the FHA by improperly originating and underwriting mortgages (FHA).
The lawsuit that was filed and litigated by former Academy underwriter Gwen Thrower (Thrower) against Academy has been resolved by the settlement that was announced today. The lawsuit was filed and litigated under the qui tam or whistleblower provisions of the False Claims Act, which permit a private party (known as a relator) to file a lawsuit on behalf of the United States and receive a portion of any recovery. Thrower filed and litigated the lawsuit against Academy.
Thrower alleged in the lawsuit that she filed in the Northern District of California that from January 2008 until April 2017, Academy had an underwriting process that encouraged employees to disregard FHA rules and falsely certify that they complied with underwriting requirements. Thrower’s lawsuit was filed in the Northern District of California. Thrower additionally stated that the government paid insurance claims on loans that were illegally underwritten by Academy as a result of Academy’s deliberately faulty mortgage underwriting methods. This was another one of Thrower’s allegations.
Principal Deputy Assistant Attorney General Brian M. Boynton, who is in charge of the Civil Division at the Justice Department, stated that “lenders that willfully induce the government to guarantee loans that are materially inadequate put homeowners and the public fisc at risk.” “The settlement that was reached today is the result of the relator’s efforts to develop this case in litigation, and it supports the department’s steps to prevent abuse of government programs that are designed to stimulate home ownership.”
The United States will receive a payment of $38,500,000 from Academy as part of the terms of the settlement. As her portion of the settlement funds, Thrower will be entitled to collect the sum of $11,511,500.
The case was overseen by the United States Attorney’s Office for the Northern District of California and the Commercial Litigation Branch of the Civil Division of the United States Department of Justice. The case is titled United States of America ex rel. Gwen Thrower v. Academy Mortgage Corporation and has the case number 3:16-cv-2120-EMC.
Under the provisions of the False Claims Act, the department has been successful in recovering billions of dollars from other lenders who are accused of deliberately breaking FHA underwriting criteria.
The claims that will be settled as a result of the settlement are simply allegations at this point, and liability has not been established.