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 program.

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.”

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