The U.S. Department of Housing and Urban Development (HUD), Office of Inspector General (OIG), assisted the U.S. Department of Justice (DOJ), Washington, DC, and the U.S. Attorney’s Offices for the District of Kansas and the Northern District of Texas in the civil investigation of PrimeLending, a PlainsCapital company. The investigation was of PrimeLending’s origination, underwriting, and quality control of Federal Housing Administration (FHA)-insured mortgage loans between 2008 and 2012. PrimeLending has its principal place of business in Dallas, TX.
On October 23, 2018, PrimeLending entered into a settlement agreement with the Federal Government to pay more than $6.75 million to avoid the delay, uncertainty, inconvenience, and expense of lengthy litigation of certain civil claims the Government stated it had against PrimeLending. The United States contends that for 79 FHA-insured loans, PrimeLending failed to follow all HUD requirements in connection with its origination, underwriting, and quality control. Specifically, the United States contends that between January and December 2008, PrimeLending failed to ensure that the 79 loans qualified for FHA insurance, improperly incentivized underwriters, and failed to perform quality control reviews as required by HUD regulations. The settlement was neither an admission of liability or wrongdoing by PrimeLending nor a concession by the United States that its claims were not well founded. Of the $6.75 million settlement, HUD FHA received more than $3.37 million.
PrimeLending also entered into an indemnification agreement with HUD to pay more than $6.74 million in restitution to indemnify FHA for the portion of losses associated with 160 FHA-insured loans that were not eligible for FHA insurance because of alleged material underwriting defects. These 160 FHA-insured loans were originated by PrimeLending between January 1, 2009, and December 31, 2012. The indemnification agreement did not constitute an admission of liability or fault on the part of either PrimeLending or HUD.
Recommendations
General Counsel
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Status2019-CF-1804-001-AOpenClosed$3,375,163.00Questioned Costs
Recommendations with questioned costs identify costs: (A) resulting from an alleged violation of a law, regulation, contract, grant, or other document or agreement governing the use of Federal funds; (B) that are not supported by adequate documentation (also known as an unsupported cost); or (C) that appear unnecessary or unreasonable.
Closed on Septiembre 30, 2019Acknowledge that $3,375,163 in the attached settlement agreement represents an amount due HUD, less DOJ’s civil debt collection fees
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Status2019-CF-1804-001-BOpenClosed$6,749,673.00Questioned Costs
Recommendations with questioned costs identify costs: (A) resulting from an alleged violation of a law, regulation, contract, grant, or other document or agreement governing the use of Federal funds; (B) that are not supported by adequate documentation (also known as an unsupported cost); or (C) that appear unnecessary or unreasonable.
Closed on Septiembre 30, 2019Acknowledge that the $6,749,673 in the attached indemnification agreement represents an amount due HUD.