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Tampa's Walter Investment hit with $29.63M settlement with feds

 
Published Sept. 5, 2015

Tampa's Walter Investment Management Corp. agreed to pay $29.63 million to resolve allegations that it submitted false claims related to a U.S. Department of Housing and Urban Development program that insures reverse mortgages.

The settlement was announced Friday by the U.S. Department of Justice. It resolves claims that Walter violated the federal False Claims Act through its servicing of mortgages insured under HUD's Home Equity Conversion Mortgages program.

The government alleged that from August 2009 to March 2015, Walter-owned Reverse Mortgage Solutions Inc. submitted claims for interest payments to which it was not entitled.

It also alleged that from July 2010 to October 2014, Walter units submitted false claims to HUD for the reimbursement of unlawful referral fees by falsely representing them as lawful sales commissions, including through the use of straw companies to liqui­date foreclosed properties.

Reverse mortgages let homeowners, typically the elderly, borrow against the equity in their homes, with no repayments required until the borrowers die or the homes are sold.

"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, a deputy assistant attorney general and 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 HUD program offers reimbursements for reverse mortgages that are not fully repaid, provided that the servicers meet various regulatory requirements and deadlines.

Walter did not respond to requests for comment.

Walter's settlement resolves allegations first made in a 2013 lawsuit by Matthew McDonald, a former Reverse Mortgage Solutions executive from Florida. He will receive $5.15 million from the settlement, the Justice Department said. The False Claims Act lets whistle-blowers sue on the government's behalf and share in recoveries.

The false claims payment by Walter comes on the heels of an earlier problem.

In April, the federal government said one of Walter's subsidiaries — Green Tree Servicing LLC — "mistreated borrowers" and would pay $63 million to settle allegations of illegal loan servicing and debt-collection practices.

Information from Times wires was used in this report.