Movement Movement Has Settled With The Feds For $24 Million Over Allegations Of Underwriting Fraud On Government Loans
Movement Mortgage has settled with the federal government for $23.75 million. The settlement is came after the government accused the lender of underwriting fraud. The government alleged movement improperly originated and underwrote mortgages insured by FHA and the VA.
The Department of Justice announced the settlement to the False Claims Act on Thursday. The settlement resolves a whistleblower lawsuit filed in 2018 by former underwriter Jennifer McNeil and former quality control team lead Ledell Javon Wilson.
Movement said in a statement to the media:
“The relevant loans, some dating back 15 years, make up less than a half percent of our total federal loans originated during this time frame. We believe we have addressed these problems and agreed to the settlement so we can move on and continue to focus on our mission.”
Movement has the authority to originate and underwrite loans without first having the government review them. If the borrowers default, they may submit a claim to the government for certain losses. Lenders must follow FHA and VA rules to ensure loans meet credit and underwriting criteria in order to be insured or guaranteed by the government.
The whistleblowers’ lawsuit alleges inexperienced underwriters made basic errors related to property calculating borrowers’ income. A former quality control underwriter estimated that around 20% of government loan files had material deficiencies,
admitted it underwrote a percentage of loans that did not meet the requirements to be eligible for the programs.
Movement Mortgage has also confirmed it failed to adhere to the government’s self-reporting requirements.
Movement will also pay the two former employees $4 million for their share of the settlement proceeds. The remaining money will go to the government. The law permits a private party to file a suit on behalf of the government. The private party is eligible to receive a portion of any recovery.
Movement Mortgage’s conduct stretches back as far as July 2008. However, the settlement agreement states that since 2018, Movement implemented measures to improve its operational and quality controls.