PHH to pay $74.5 million to resolve U.S. mortgage probes

Reuters News
Posted: Aug 08, 2017 12:20 PM

By Nate Raymond

(Reuters) - The U.S. Justice Department on Tuesday said mortgage company PHH Corp will pay nearly $74.5 million to resolve claims it generated defective loans that the government then insured and Fannie Mae and Freddie Mac bought.

The deal with Mount Laurel, New Jersey-based PHH follows prior settlements between the Justice Department and financial companies over shoddy mortgage loans in recent years in the wake of the 2007-2009 financial crisis.

"This significant resolution helps rectify the misconduct by returning more than $74 million in wrongfully claimed funds to the government," Acting U.S. Attorney Gregory Brooker in Minnesota said in a statement.

PHH, in a statement, said it cooperated fully in the investigations that led to the settlement agreements since first receiving subpoenas in 2013. It also said it had agreed to resolve the probes without admitting liability.

"Adhering to high legal, regulatory and ethical standards is at the core of how we conduct business, and we remain committed to serving our customers and all of our stakeholders consistent with that principle," PHH said.

The settlements resolve claims that PHH failed to comply with certain origination, underwriting and quality control requirements of the U.S. Federal Housing Administration, the U.S. Veterans Affairs Department, Fannie Mae and Freddie Mac.

The Justice Department said that from 2006 to 2011, PHH certified ineligible home loans for FHA insurance. The government later incurred substantial losses when it paid insurance claims on those mortgages, the department said.

PHH also submitted ineligible loans to be guaranteed for coverage through a Veterans Affairs Department program that helps members of the military and veterans become homeowners, the Justice Department said.

And it also originated and sold ineligible loans to mortgage giants Fannie Mae and Freddie Mac, which the government seized in 2008 and then put into a conservatorship under the Federal Housing Finance Agency, the Justice Department said.

(Reporting by Nate Raymond in Boston; Editing by Dan Grebler)