Dec. 15 (UPI) — Academy Mortgage Corporation has agreed to pay $38.5 million to settle a lawsuit alleging the mortgage company improperly underwrote mortgages insured by the Federal Housing Administration.
Under the terms of the settlement, the Justice Department announced Wednesday, Academy will pay $38.5 million to the United States.
The mortgage company, based in Draper, Utah, will pay more than $11.5 million to Academy underwriter Gwen Thrower. Thrower filed the lawsuit in the Northern District of California under the whistleblower provisions of the False Claims Act, which allows a private party to sue on behalf of the United States.
Thrower claimed Academy Mortgage used an underwriting process that led employees to disregard FHA rules and falsely certify compliance with underwriting requirements. Thrower also alleged, as a result, the government paid insurance claims on loans improperly underwritten by Academy.
“Lenders that knowingly cause the government to guarantee loans that are materially deficient put both homeowners and the public fisc at risk,” said Principal Deputy Assistant Attorney General Brian Boynton, head of the Justice Department’s Civil Division.
“The settlement announced today is a result of the relator’s efforts to develop this case in litigation and complements the department’s actions to prevent abuse of government programs designed to foster home ownership.”
