The U.S. Department of Housing and Urban Development (HUD), Office of Inspector General (OIG), assisted HUD’s Office of Program Enforcement in the civil investigation of American Midwest Mortgage Corporation. American’s principal place of business is located in Cleveland, OH. American became an FHA-approved direct endorsement lender on August 28, 1983. The direct endorsement lender program authorizes private-sector mortgage lenders to approve mortgage loans for insurance by FHA. Lenders approved for the program must follow various FHA requirements and provide annual and per loan certifications that the lender complied with these requirements when underwriting and approving loans for FHA insurance.
Based in part on OIG’s review, on December 11, 2015, HUD notified American that it believed American was liable under the Program Fraud Civil Remedies Act of 1986, 31 U.S.C. (United States Code) 3801-3812, for submitting false claims, false statements, or both, associated with FHA-insured loan transactions.
On April 7, 2016, to avoid the uncertainty of litigation, the parties entered into a settlement agreement related to five FHA-insured mortgage transactions that failed to meet HUD underwriting requirements.