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TXL Mortgage Corp. faces a lawsuit against federal government

By Hoang Tran | Oct 21, 2015

WASHINGTON, D.C. (Legal Newsline) - The United States government is suing a mortgage company for damages over nine loans that allegedly violated Federal Housing Administration rules.

The United States of America filed a lawsuit on Oct. 8 in the U.S District Court for the District of Columbia court against TXL Mortgage Corp. of Houston, citing violations of the False Claims Act, breach of contract, breach of fiduciary duty, negligence, unjust enrichment and payment by mistake.

The federal government is suing the defendant over claims of harm sustained by the Department of Housing and Urban Development in connection with TXL’s origination of nine residential mortgage loans underwritten, approved, and endorsed by The Federal Housing Administration. TXL knowingly approved nine loans that violated FHA rules but falsely certified their compliances, the complaint states. According to the claim, TXL failed to exercise due diligence when underwriting FHA insured mortgages and actively manipulated HUD’s Total Mortgage scorecard, exposing the FHA to greater risk and causing HUD to pay more than $1.6 million in insurance claims when the nine loans defaulted, according to the complaint.

Therefore, the U.S. is demanding a trial by jury and is suing for an undisclosed amount of damages, treble damages, civil penalties for each false claim and false record or statement made by TXL in the amount of $5,500 to $11,000 per false claim, interest, court costs, and other rewards deemed just and proper. It is represented by Vincent H. Cohen Jr., acting U.S. attorney; Daniel F. Van Horn, chief, Civil Division; and Brian P. Hudak, assistant U.S. attorney.

U.S District Court for the District of Columbia case number 1:15-cv-01658

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