WASHINGTON (Legal Newsline) —
The U.S. Department of Justice announced Dec. 28 that United Shore Financial
Services LLC (USFS) agreed to a $48 million settlement after allegations it
violated the False Claims Act.
“The settlement announced today holds United Shore accountable for its
endorsement of ineligible loans for FHA mortgage insurance,” said Principal deputy
assistant attorney general Benjamin C. Mizer, head of the Justice Department’s Civil Division.
According to the Department,
USFS underwrote loans insured by the U.S. Department of Housing and Urban
Development’s (HUD) Federal Housing Administration (FHA) that did not meet
applicable requirements. USFS had direct endorsement lender status in the FHA
It could therefore underwrite loans for FHA insurance. The FHA does
not review these loans; it is therefore up to the lender to follow program
rules designed to ensure proper underwriting and certifying.
“The federal government insures loans on the condition that lenders
comply with certain rules to safeguard federal funds,” said U.S. attorney
Barbara L. McQuade for the Eastern District of Michigan.
“When lenders breach their duty of due diligence and
make risky loans that go bad, taxpayers pay the bill. By holding accountable lenders who fail to
comply with underwriting requirements, we hope to send a message to all lenders
that they must comply with government standards for federally insured loans.”