James B. Nutter, Mortgage Fraud, Kansas 2024

Defendant Settles Mortgage Fraud Charges

James B. Nutter & Company, a former mortgage lender located in Kansas City, Missouri, has agreed to pay 2.4 million to resolve allegations that it violated the False Claims Act and the Financial Institutions Reform, Recovery and Enforcement Act of 1989 by knowingly underwriting Home Equity Conversion Mortgages (HECM) insured by the Department of Housing and Urban Development (HUD)’s Federal Housing Administration (FHA) that did not meet program eligibility requirements.

The HECM program helps support our nation’s senior citizens by providing an additional source of funds to supplement their income, said Principal Deputy Assistant Attorney General Brian M. Boynton, head of the Justice Department’s Civil Division. Together with our partners at HUD, we are committed to protecting the financial integrity of this critical program and to pursuing those who seek to abuse it.

Lenders who participate in the FHA’s HECM program are authorized to underwrite mortgages without first having the government review the loans for compliance with the agency’s underwriting and origination requirements. If an FHA-insured loan defaults, the holder of the loan can then recover from the United States for certain losses. Lenders commit to following FHA rules to ensure that only eligible mortgages are insured by the government.

The settlement announced today resolves the United States’ allegations in a lawsuit filed in 2020 that James B. Nutter & Company knowingly violated FHA underwriting requirements when it allowed inexperienced temporary staff to underwrite FHA-insured loans, and submitted loans for FHA insurance with underwriter signatures that were falsified and/or affixed before all the documentation the underwriter should have reviewed was complete.

This case sought to redress serious violations of FHA requirements that posed a risk to the HECM program, said HUD General Counsel Damon Smith. HUD will continue to protect the integrity of this important mortgage program that serves the interests of our nation’s senior citizens.

The U.S. Attorney’s Office is dedicated to seeking recovery from mortgage lenders who take advantage of FHA programs and ignore essential program requirements, said U.S. Attorney Teresa A. Moore for the Western District of Missouri. The integrity and resources of those important programs must not be put at risk by mortgage lenders who put their own financial interests first.

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