Guaranteed Rate, False Claims, New York 2024

ALBANY, NEW YORK – In a major blow to the mortgage industry, Guaranteed Rate, Inc. has agreed to pay the United States $15.06 million to resolve allegations that it violated the False Claims Act and the Financial Institutions Reform, Recovery and Enforcement Act of 1989 (FIRREA) by knowingly violating material program requirements when it originated and underwrote mortgages insured by the Department of Housing and Urban Development’s (HUD) Federal Housing Administration (FHA) or guaranteed by the Department of Veterans Affairs (VA).

Guaranteed Rate, headquartered in Chicago, Illinois, with branches across the United States, including in upstate New York, is accused of knowingly failing to comply with material program rules that require lenders to maintain quality control programs to prevent and correct underwriting deficiencies, self-report any materially deficient loans that they identify, and ensure that the underwriting process is free from conflicts of interest.

The settlement announced today resolves allegations that Guaranteed Rate knowingly failed to adhere to the applicable self-reporting requirements, that its FHA underwriters received commissions and gifts in violation of program rules, and that there were instances in which its government underwriters were instructed not to review documents that were relevant to the underwriting decision.

As part of the settlement, Guaranteed Rate admitted that it certified and the government insured and guaranteed loans approved by Guaranteed Rate that were not eligible for FHA mortgage insurance or VA loan guarantees and that HUD and VA would not have insured or guaranteed the loans but for its actions.

While the covered conduct stretched back as far as January 2008, Guaranteed Rate took significant measures to stop the practices, both before and after being notified of the United States’ investigation. It received credit for doing so in connection with the settlement.

“Lenders participating in mortgage programs backed by taxpayers must follow rules designed to protect both program integrity and homeowners,” said United States Attorney Grant C. Jaquith. “Today’s settlement holds Guaranteed Rate accountable for its past violations and reflects that it has strengthened its internal controls to ensure future compliance with Federal Housing Administration and Department of Veterans Affairs requirements.”

The case highlights the importance of lenders complying with program requirements to protect both taxpayers and homeowners.

Source: https://www.justice.gov/usao-ndny/pr/guaranteed-rate-pay-15-million-resolve-allegations-it-knowingly-caused-false-claims