Mortgage company to pay $15 million in settlement regarding government backed mortgages

Mortgage company Guaranteed Rate Inc. will pay $15.06 million as part of settlement agreement related to the violation of federal requirements while participating in government-backed mortgage programs, according to the Justice Department. 

In additional to the payment, Guaranteed Rate made several admissions including that its actions resulted in the federal government backing loans that were ineligible for Federal Housing Administration mortgage insurance and Department of Veterans Affairs loan guarantees.

As part of the settlement, the Chicago-based residential mortgage company also "admitted that it failed to adhere to the applicable self-reporting requirements" and "that its FHA underwriters received commissions and gifts in violation of program rules."

It also admitted that there were occasions when Guaranteed Rate's "government underwriters were instructed not to review documents that were relevant to the underwriting decision," according to the press release Tuesday from the U.S. Attorney's Office for the Northern District of New York.

The investigation originated because a former Guaranteed Rate employee filed a whistleblower lawsuit. That individual will now receive a portion of the financial recovery that amounts slightly more than $2.4 million.

"Lenders participating in mortgage programs backed by taxpayers must follow rules designed to protect both program integrity and homeowners,” U.S. Attorney Grant C. Jaquith said. “Today’s settlement holds Guaranteed Rate accountable for its past violations."

Jaquith also said the agreement includes the company strengthening its internal controls to ensure future compliance with Federal Housing Administration and Department of Veterans Affairs requirements.