On May 13, 2016, the Justice of Department announced that M&T Bank Corporation has agreed to pay the United States $64 million to resolve allegations that it violated the False Claims Act by knowingly originating and underwriting mortgage loans insured by the U.S. Department of Housing and Urban Development’s (HUD) Federal Housing Administration (FHA) that did not meet applicable requirements.
The settlement resolves allegations M&T Bank failed to comply with requirements set forth by FHA. Furthermore, M&T Bank was aware that a considerable number of these loans were too risky, faulty, did not qualify under HUD standards and were also ineligible for FHA insurance claims.
Additionally, the Justice of Department affirmed that M&T Bank failed on the review of a sample of FHA loans needed by HUD in the 2006 to 2011 period and misrepresented a "major error" rate on the loans which were obtained through a quality control process.
As a result of M&T Bank’s conduct, HUD insured hundreds of loans approved by M&T Bank that were not eligible for FHA mortgage insurance under the Direct Endorsement program and that HUD would not otherwise have insured.
The allegations arose from a whistleblower lawsuit brought forth by former M&T Bank employee.
