A settlement has been reached to resolve False Claims Act allegations against Primary Residential Mortgage Inc and SecurityNational Mortgage Company.
The allegations arose from a lawsuit that claimed Primary Residential Mortgage Inc and SecurityNational Mortgage Company violated the False Claims Act by knowingly originating and underwriting mortgage loans insured by the U.S. Department of Housing and Urban Development’s Federal Housing Administration that did not meet applicable requirements.
On October 3, 2016, the Department of Justice announced, that as part of the settlements Primary Residential Mortgage Inc (PRMI) and SecurityNational Mortgage Company admitted they certified loans for FHA mortgage insurance that did not meet HUD underwriting requirements regarding borrower creditworthiness and eligibility.
PRMI admitted it endorsed loans that were not eligible for FHA mortgage insurance, including loans where:
- PRMI failed to document the assets used to qualify the borrower for FHA mortgage insurance and omitted liabilities owed by the borrower from the underwriting analysis;
- PRMI failed to document income used to qualify the borrower for FHA mortgage insurance;
- PRMI failed to verify the borrower’s earnest money deposit; and
- The borrower was delinquent on a second, pre-existing FHA mortgage.
SecurityNational admitted it endorsed loans that were not eligible for FHA mortgage insurance, including loans where:
- The borrower was delinquent on federal debt and had an unpaid court-ordered judgment;
- The borrower was four months delinquent on the underlying mortgage SecurityNational refinanced into an FHA loan;
- The mortgage loan amount exceeded HUD’s loan to value requirements;
- SecurityNational failed to document income used to qualify the borrower for FHA mortgage insurance; and
- SecurityNational failed to analyze the borrower’s delinquent credit history.
Primary Residential Mortgage Inc has agreed to pay the United States $5 million and SecurityNational Mortgage Company has agreed to pay $4.25 million.
