Mortgage company Academy Mortgage Corporation (Academy), based in Draper, Utah, has agreed to pay $38.5 million to settle allegations that it violated the False Claims Act by making false claims. and writing mortgages insured by the Federal Housing Administration (FHA).
The announcement made today settles a lawsuit filed and settled by former Academy reporter Gwen Thrower (Thrower) against the Academy under who is father or the provisions of the False Claims Act, which allows a private party (called a relator) to file a claim on behalf of the United States and receive a portion of any repairs.
In her lawsuit filed in the Northern District of California, Thrower alleged that from January 2008 through April 2017, the Academy had an underwriting practice that led employees to ignoring FHA rules and falsely asserting compliance with requirements. Thrower also alleged that, as a result of the Academy’s knowledge of inadequate mortgage underwriting practices, the government paid insurance claims on loans that were not paid by the Academy.
“Lenders knowingly cause the government to approve loans that are completely inadequate, putting both homeowners and government funds at risk,” said the representative. Assistant Attorney General Brian M. Boynton, head of the Department of Justice’s Division. “The decision announced today is a result of the relator’s efforts to develop this case in the courts and complete the department’s actions to prevent the misuse of government programs designed to nurture the home ownership”.
Under the terms of the settlement, the Academy will pay $38,500,000 to the United States. Thrower will receive $11,511,500 if he receives his share of the settlement.
The subject contains information United States of America ex rel. Gwen Thrower v. Academy Mortgage CorporationNo. 3:16-cv-2120-EMC, and was overseen by the US Attorney’s Office for the Northern District of California and the Civil Division’s Commercial Litigation Branch.
The department has recovered billions of dollars under the False Claims Act from other lenders accused of knowingly violating FHA lending requirements.
The claims resolved by the settlement are only allegations and have not established liability.