New Jersey Mortgage Lender Agrees to Pay $113 Million in Settlement
Freedom Mortgage Corporation, a mortgage lender based in Mt. Laurel, New Jersey, has agreed to pay $113 million to settle allegations that it violated the False Claims Act by knowingly originating and underwriting single-family 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 for the FHA insurance program.
The settlement, announced by the Justice Department, resolves allegations that Freedom Mortgage Corporation failed to comply with certain FHA origination, underwriting, and quality control requirements. Between January 1, 2006, and December 31, 2011, the company certified mortgage loans for FHA insurance that did not meet HUD underwriting requirements and were therefore not eligible for FHA mortgage insurance.
According to the settlement, Freedom Mortgage Corporation also failed to adhere to FHA’s quality control requirements. Between 2006 and 2008, the company did not share its early payment default (EPD) quality control reviews with production and underwriting management, nor did it require responses to its EPD quality control findings from its production or underwriting staff.
As a result of Freedom Mortgage Corporation’s conduct, HUD insured hundreds of loans that were not eligible for FHA mortgage insurance. The company’s actions caused losses to the FHA and its program.
The settlement announced today resolves allegations that Freedom Mortgage Corporation failed to comply with certain FHA origination, underwriting, and quality control requirements. As part of the settlement, Freedom Mortgage Corporation admitted to the following facts: Between January 1, 2006, and December 31, 2011, it certified mortgage loans for FHA insurance that did not meet HUD underwriting requirements and were therefore not eligible for FHA mortgage insurance.
Freedom Mortgage Corporation has agreed to pay the United States $113 million to resolve allegations that it violated the False Claims Act. The company is headquartered in Mt. Laurel, New Jersey.
“It is imperative that mortgage lenders that participate in the FHA insurance program follow the rules and requirements set forth by HUD,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division. “We will continue to work with our partners at HUD, its Office of Inspector General, and U.S. Attorneys around the country to protect homeowners and taxpayers from those who knowingly seek to abuse the FHA program for their own gain.”
“Freedom Mortgage did not properly comply with FHA rules for the mortgages it was generating and did not adequately monitor early payment defaults,” said U.S. Attorney Paul J. Fishman for the District of New Jersey. “It also failed to report to HUD the defaults it did discover, as required by its participation in the program. Today’s settlement recognizes those failures and imposes an appropriate sanction.”
Defendant: Freedom Mortgage Corporation
Criminal Charges: Violated the False Claims Act
City and State: Mt. Laurel, New Jersey
Crime Date: 2023 (alleged)
Sentence: Paid $113 million settlement
Dollar Amount: $113 million
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- Tammy Le, Wire Fraud, New Jersey 2019 · Florida
- James O. Alston, Employment Discrimination, New Jersey 2004 · Florida
Key Facts
- State: Federal
- Category: White Collar Crime
- Source: DOJ Press Release â†â€â€
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