Lender to pay $113M to U.S. in settlement

WASHINGTON (AP) — Freedom Mortgage has agreed to pay the U.S. government $113 million to settle allegations that it failed to comply with federal rules.

The Justice Department says the New Jersey-based lender did not properly comply with Federal Housing Administration rules for mortgages it was generating and didn’t monitor payment defaults.

The government says from 2006 to 2011, the company certified mortgage loans for FHA insurance that didn’t meet federal requirements and so were not qualified for the insurance.

Freedom Mortgage had the authority to originate, underwrite and endorse mortgage for federal insurance.

Under the rules, if a company like Freedom Mortgage issues a loan for insurance and it later defaults, the loan holder can submit a claim to the Housing and Urban Development Department for the losses.

Freedom Mortgage was taking part in an FHA program that left lenders, and not the government, responsible for ensuring mortgage compliance rules were followed.

“Freedom Mortgage did not properly comply with FHA rules for the mortgages it was generating,” said U.S. Attorney for New Jersey Paul Fishman.