Walter Investment Management Corp., (WIMC) has agreed to pay $29.63 million to resolve allegations that the company submitted false reverse mortgage loan claims.
The Justice Department announced on Friday that WIMC's subsidiaries, Reverse Mortgage Solution Inc. (RMS), REO Management Solutions, LLC, and RMS Asset Management Solutions LLC, are all being accused of violating the False Claims Act by submitting false reverse mortgage claims to HUD's Home Equity Conversion Mortgages (HECM) program.
“The Department of Justice is committed to ensuring that those who service HUD-insured reverse mortgages are held accountable for their knowing failure to comply with important HUD requirements,” said Benjamin C. Mizer, principal deputy assistant attorney general, head of the Justice Department’s Civil Division. “Schemes such as these undermine an important tool available to older Americans who wish to use a HUD-insured reverse mortgage loan to age in place.”
The Civil Division, the U.S. Attorney’s Office of the Middle District of Florida, and HUD’s Office of Inspector General and Office of General Counsel collaborated to reach this settlement, the department said.
The allegations against WIMC were filed in a lawsuit by former RMS executive Matthew McDonald under whistleblower provisions of the False Claims Act, the government noted. McDonald is expected to receive $5.15 million for his share of the recovery in this case.
The Justice Department alleged that from August 2009 to March 2015, RMS "submitted false claims for debenture interest from HUD by failing to properly disclose that it had not met certain deadlines and, therefore, was not entitled to such interest payments."
In addition, the government also alleged that from July 2010 to October 2014, WIMC and its subsidiaries "submitted false claims to HUD for the reimbursement of unlawful referral fees by falsely representing them to be lawful sales commissions."
The claims resolved by the settlement are allegations only, and there has been no determination of liability, the Justice Department concluded.
“Today’s settlement is another example that we are serious about making certain our approved lenders are complying with FHA requirements,” said Helen Kanovsky, HUD general counsel. “This is a significant settlement concerning FHA’s reverse mortgage program, which is designed to benefit America’s seniors. We’re pleased that WIMC agreed to accept financial responsibility for these violations.”