Based on a request from the Assistant U.S. Attorney’s Office in Salt Lake City, UT, we provided information about single-family lenders with high default rates. We then reviewed the available case binders for 38 loans for which the Federal Housing Administration (FHA) had paid claims that were underwritten by City First Mortgage Services, LLC. We completed the review and referred alleged violations to the U.S. Department of Housing and Urban Development’s (HUD) Office of Program Enforcement for action under the Program Fraud Civil Remedies Act of 1986.
On July 20, 2014, HUD filed a complaint under the Program Fraud Civil Remedies Act of 1986 against City First and its owner, alleging that they failed to follow FHA requirements when originating and underwriting 11 FHA-insured loans. HUD alleged that this failure amounted to City First’s and its owner’s submitting false certifications on the 11 loans.
City First and its owner disputed HUD’s claims. However, to arrive at a mutually satisfactory resolution of the matter without the expense and uncertainty of further litigation, City First and its owner agreed to pay HUD $425,000. The settlement agreement did not constitute an admission of liability or fault by any party.