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Lennar, mortgage company loaned to unqualified buyers and deceived feds, lawsuit alleges

Homebuilding giant Lennar Corp. and its mortgage subsidiary made loans to unqualified buyers and violated federal laws, a former employee alleges.
Lennar Corp. builds new homes in many communities in the Tampa Bay area, including Concord Station in Land O’ Lake.
Published Jan. 7

CLEARWATER — Homebuilding giant Lennar Corp. and its Clearwater-based mortgage subsidiary made loans to unqualified buyers and violated federal laws, a former employee alleges.

In a lawsuit filed in Pinellas County Circuit Court, Wanda Burling says she repeatedly complained to a vice president at Eagle Home Mortgage about the company's lending practices only to be warned to "let it go'' if she wanted to keep her job.

The same executive also said that given a choice between Burling and loan originators who "may or may not follow the rules,'' Eagle would always choose the originators as they are "producers'' for the company.

Burling, who was fired last year, is seeking back pay with interest and compensatory damages from Lennar and Eagle, formerly known as Universal American Mortgage Co.

Miami-based Lennar, one of the nation's largest home builders, is active in numerous new-home communities in the Tampa Bay area. Records show that Eagle has made thousands of mortgage loans in Hillsborough and Pasco counties.

In December, the Justice Department reached a $13.2 million settlement with Eagle to resolve allegations that it violated the False Claims Act by falsely certifying that it complied with FHA lending standards. It is not known whether Burling's allegations factored into that case; she could not be reached for comment and her lawyers did not return calls.

In the suit filed under Florida's whistleblower act, Burling, 64, said her job as a senior quality control manager was to review Eagle's lending activities to ensure they complied with state and federal regulations. She said she became aware of problems in 2016, soon after she was hired, when an elderly man with a reverse mortgage complained that the loan originator had lied to him.

In checking, the suit says, Burling discovered that the man's application was not properly completed and that he was never sent the disclosures of fees, costs or other information required under the federal Truth in Lending Act.

The suit also alleges:

• In at least four cases, the loan originator, the appraiser and the processor were related to one another. The originator would add "reserves'' to make it appear the borrowers had more funds then they did. The originator would also omit debts or add income from a part-time job the borrower no longer had. "All of these practices fraudulently increased the likelihood of the borrower being approved for the loan,'' the suit says.

• In other cases, borrowers did not have enough money to qualify for loans yet received them anyway. Eagle and Lennar hid that from the federal government in violation of the False Claims Act, the suit says.

• Any loans that Eagle pulled for audit were placed in a system called ACES. In order to hide negative findings, though, Eagle put the findings in the "notes'' section of the system as opposed to "reporting'' section. "This practice hid the findings from any government agency performing an audit,'' the suit says.

Burling said an Eagle vice president, Rebecca "Becky" Moore, warned her not to contact federal authorities about compliance issues. Moore also told her that Eagle was known as the "Good Ol' Boy group,'' that senior managers did not like strong women and that she "should be careful as they were after her.''

Last March, Moore fired Burling for "poor performance'' even though she had never received any disciplinary write-ups and had been given a raise and 20 percent bonus after her 2017 review. Pressed to elaborate on what constituted poor performance, Moore could not give an answer although a human resources representative subsequently told Burling: "We do not like your management style and we'll leave it like that.''

Moore, who is not a defendant in the suit, could not be reached for comment. Lennar does not comment on pending litigation.

Conact Susan Taylor Martin at smartin@tampabay.com or (727) 893-8642. Follow @susanskate.

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