The U.S. Department of Housing and Urban Development’s (HUD), Office of Inspector General (OIG), in conjunction with the Department, the U.S. Department of Justice, and the U.S. Attorney’s Offices for the Eastern District of Michigan and Northern District of Ohio, conducted a joint investigation of U.S. Bank National Association’s (U.S. Bank) loan originations, underwriting practices, and quality control program for Federal Housing Administration (FHA) insured loans.

To avoid the delay, uncertainty, inconvenience, and expense of protracted litigation in regards to the U.S. Government’s claims, and in consideration of the mutual promises and obligations, on June 30, 2014, U.S. Bank entered into a settlement agreement to pay $200 million.  Of the settlement total, the FHA insurance fund received nearly $144.2 million, before incurring related costs.  As part of the settlement, U.S. Bank agreed that it engaged in certain conduct in connection with its origination, underwriting, quality control, and endorsement of single family residential mortgage loans that were insured by the FHA on or after January 1, 2006, and endorsed by U.S. Bank on or before December 31, 2011, and resulted in claims submitted to HUD.

We recommend that HUD’s Office of General Counsel, Office of Program Enforcement, allow HUD OIG to post the $144,199,970 recovery in HUD’s Audit Resolution and Corrective Actions Tracking System as an ineligible cost.