Movement Mortgage will pay $23.7M to settle probe of false claims to fed loan programs
Indian Land, S.C., mortgage lender Movement Mortgage has agreed to pay $23.7 million to settle allegations of false claims submissions involving federal mortgage programs, authorities said.
Federal prosecutors said Thursday their investigation was triggered by a whistleblowers’ lawsuit from two former Movement Mortgage workers. They will receive $4 million of the settlement.
The whistleblowers accused the company of underwriting loans for people whose income and other requirements did not meet standards for the Federal Housing Administration and Veterans Affairs loan programs, said attorney Nelson Thomas. He’s a founding partner of the law firm which handled the whistleblowers’ case, Thomas and Solomon LLP of Rochester, New York.
The alleged conduct dated back to July 2008, and included a period of rapid expansion for the company, Carla Freedman, the U.S. Attorney for the Northern District of New York, said in a news release. Movement Mortgage underwrote loans across the country, including in upstate New York.
Mortgage Movement admitted it certified “a material percentage of loans” that did not meet FHA mortgage insurance and VA home loan guarantee requirements despite inaccurately representing that the loans complied with the requirements, Freedman said.
The company also acknowledged that the agencies would not have insured or guaranteed the loans except for its submission of false certifications, Freedman said.
“Today’s settlement holds Movement Mortgage accountable for its past violations,” Freedman said, “while acknowledging that it has taken steps to strengthen its internal controls to ensure future compliance with FHA and VA requirements.”
In a statement to The Charlotte Observer, Mortgage Movement said, “The US Attorney noted that we ‘took significant measures to stop the practices, both before and after being notified of the United States’ investigation,’ and that the settlement is ‘not an admission of any legal liability.’
“The relevant loans, some dating back 15 years, make up less than a half percent of our total federal loans originated during this time frame,” the company said. “We believe we have addressed these problems and agreed to the settlement so we can move on and continue to focus on our mission.”
Companies like Movement Mortgage that have the authority to originate and underwrite mortgages insured by the FHA or guaranteed by the VA can approve loans without having the government first review them, according to Freedman.
“That’s why whistleblowers are so crucial,” Thomas said. “How is the government going to know that the person lied (in the) application?
“Movement was more cooperative and transparent than a lot of other lenders were with the government,” Thomas added.
About Movement Mortgage
The company was founded in 2008 by former Carolina Panthers tight end Casey Crawford.
The company has more than 4,500 workers and has an annual loan volume of $30 billion, according to its website. Movement Mortgage also said it has over 775 offices in 49 states.
Its non-profit Movement Foundation has funded a network of charter schools in Charlotte as well as affordable housing and health care initiatives.
