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A Folsom-based national mortgage lending company has agreed to pay the federal government more than $3.6 million following allegations that it falsified compliance with insurance requirements, officials announced this week.
The U.S. government alleged that Sierra Pacific Mortgage Co. Inc. submitted a number of loans for Federal Housing Administration insurance between April 2007 and June 2009 with the knowledge that those loans didn’t qualify, the U.S. Attorney’s Office said Wednesday in a news release.
This would represent a violation of the False Claims Act.
“By improperly approving loans that did not qualify for FHA insurance, SPM caused the United States to pay insurance claims on those loans when they defaulted,” the release says, in part. “The United States further alleged that SPM failed to properly respond to internal warning signs that its loans were poorly underwritten.”
SPM settled for $3,670,000 to resolve the case about a decade after the alleged falsifications took place, the U.S. Attorney’s Office announced Wednesday. The claims made by the government remain allegations.
The case resulted from an investigation by the U.S. Department of Housing and Urban Development’s Office of Inspector General and the U.S. Attorney’s Office.
“The wrongful actions of SPM were not minor mistakes or foot faults,” HUD counsel Paul Compton said in a written statement. “There is no room at FHA for lenders who knowingly violate the trust placed in them as direct endorsement lenders.”