According to Regions, the agreement with the
Regions noted that the inquiry delved into the origination, underwriting and quality-control practices on loans insured by the
In addition, the bank allegedly failed to maintain a quality-control program as required by HUD.
"Regions' QC department did not consistently review an adequate sample of FHA-insured loans," the statement said. "Moreover, to the extent that Regions' QC department identified deficiencies during the course of its loan review, Regions engaged in a pattern of 'curing' QC findings by obtaining documentation that was not available to the underwriter at the time the loan was approved."
The alleged actions resulted in an understated defect rate reported to senior management.
The government also claims that Regions failed to review loans that became 60 days' delinquent during the first-six months and instead only reviewed loans after they were 90 days past due.
In addition, Regions didn't start self reporting FHA loans with material deficiencies to HUD until 2011.
The government alleges that HUD subsequently incurred substantial losses from FHA insurance claims.
Regions' alleged actions resulted in violations of the False Claims Act.
For its part, Regions said it admitted no liability and agreed to the settlement in order to avoid the expense of potential litigation.
"Regions is pleased to resolve this inquiry and is committed to maintaining fair, consistent and accurate loan origination practices," the company stated.
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