Movement Mortgage to pay $23.7M to settle federal case

ALBANY, N.Y. — Movement Mortgage, LLC, has agreed to pay the United States $23.75 million to resolve allegations that it violated the False Claims Act, U.S. Attorney Carla B. Freedman announced June 29.

The firm failed to comply with 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).

Movement Mortgage is headquartered in Indian Land, with loans underwritten across the United States, including in upstate New York.

"Lenders participating in mortgage programs backed by taxpayers must follow rules designed to protect both program integrity and homeowners," Freedman said.

"Today's settlement holds Movement Mortgage accountable for its past violations, while acknowledging that it has taken steps to strengthen its internal controls to ensure future compliance with FHA and VA requirements."

Participants in FHA insurance and VA guarantee programs, like Movement Mortgage, can originate and underwrite mortgages without having the government review the loans for compliance with the agency's underwriting and origination requirements. If one of those loans defaults, a holder may submit a claim to the United States for certain losses. Lenders are therefore required to follow FHA and VA rules designed to ensure that only mortgages that meet key credit and underwriting criteria are insured or guaranteed by the government.

The settlement resolves allegations that Movement Mortgage failed to maintain quality control programs to prevent and correct underwriting deficiencies, self-report any materially deficient loans, and ensure that the underwriting process is free from conflicts of interest.

As part of the settlement, Movement Mortgage admitted that it certified for FHA mortgage insurance and VA home loan guarantees a material percentage of loans that did not meet applicable requirements and were not eligible under those programs, despite inaccurately representing to HUD and the VA that such loans complied with applicable program requirements.

Movement Mortgage also acknowledged that HUD and the VA would not have insured or guaranteed the loans but for its submission of false certifications. The firm also admitted that it failed to adhere to HUD and the VA's applicable self-reporting requirements.

This conduct stretched back as far as July 2008, including a period of rapid expansion by the company. As Movement Mortgage 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.

"HUD is committed to protecting public funds by ensuring that lenders follow the rules for origination of FHA-insured mortgages," said Damon Smith, general counsel for HUD. "Through this settlement, Movement Mortgage is accepting responsibility for its past actions by fully repaying the FHA insurance fund for its losses on defaulted loans that should not have been issued."

In a statement, the firm said: "Movement Mortgage has a mission unlike anyone in the mortgage industry — to serve others, particularly the underserved, minorities, and low-income families, and our federal loan programs are extremely important to our homebuyers and to us.

The US Attorney noted that we 'took significant measures to stop the practices, both before and after being notified of the United States' investigation,' and that the settlement is 'not an admission of any legal liability.'

"The relevant loans, some dating back 15 years, make up less than a half% of our total federal loans originated during this time frame. We believe we have addressed these problems and agreed to the settlement so we can move on and continue to focus on our mission."

This investigation was triggered by a whistleblower lawsuit filed by two former employees of Movement Mortgage. The whistleblowers will receive a total of $4,037,566 of the settlement proceeds.