A New Jersey mortgage lender with operations in Edina has agreed to pay more than $74 million to settle a lawsuit and a U.S. Department of Justice investigation into defective home loans.
A pair of settlements, reached in Minnesota and New York, stem from an investigation by the U.S. attorney's office in Minnesota and a lawsuit filed in New York by a former employee who turned whistleblower and alleged years of faulty lending practices.
PHH Corp., whose PHH Home Loans business operates in Edina, has agreed to pay $65 million to resolve alleged Federal Housing Administration (FHA) violations and another $9.45 million to resolve allegations that it sent the U.S. Department of Veterans Affairs defective loans that were purchased by government mortgage programs.
The settlement also will pay out more than $9 million to the former PHH employee who sued the company in 2013, the U.S. attorney's office announced Tuesday.
PHH agreed to resolve False Claims Act violations that it originated and underwrote mortgage loans that the company knew failed to meet applicable requirements, incurring heavy costs for taxpayers and homeowners, according to Gregory Brooker, acting U.S. attorney in Minnesota.
"This significant resolution helps rectify the misconduct by returning more than $74 million in wrongfully claimed funds to the government," Brooker said in a statement released Tuesday.
The company said in a statement that it agreed to resolve the case, without admitting liability, "in order to avoid the distraction and expense of potential litigation."
"While we cooperated fully in these investigations since receiving subpoenas in 2013, we concluded that settling these matters is in the best interest of PHH and its constituents," the company said. "Adhering to high legal, regulatory and ethical standards is at the core of how we conduct business ..."
