MetLife Home Loans has agreed to pay the federal government $123.5 million to resolve allegations that MetLife Bank approved federal home loans to people who didn’t qualify under government rules.
The investigation, by U.S. Attorney John Walsh’s office in Colorado, determined that MetLife Bank falsely approved U.S. Department of Housing and Urban Development home-loan applications, Walsh said in a news release Wednesday.
“MetLife Bank took advantage of the (Federal Housing Administration) insurance program by knowingly turning a blind eye to mortgage loans that did not meet basic underwriting requirements, and stuck the FHA and taxpayers with the bill when those mortgages defaulted,” Walsh said in the statement.
MetLife Bank, Walsh said, was among many banks ountry whose irresponsible lending practices contributed to a “catastrophic wave of home foreclosures across the country.”
MetLife Bank, which was headquartered in Bridgewater, N.J., merged in June 2013 into MetLife Home Loans, an Irving, Texas, mortgage finance company. It had been a “Direct Endorsement Lender” in the FHA’s insurance program.
“MetLife Bank’s improper FHA lending practices not only wasted taxpayer funds but also inflicted harm on homeowners and the housing market that lasts to this day,” said acting assistant attorney general Joyce R. Branda of the Justice Department’s civil division.
If a loan certified for FHA insurance defaults, the holder of the loan may submit an insurance claim to the FHA for the losses resulting from the defaulted loan.
From September 2008 through March 2012, MetLife Bank repeatedly certified for FHA insurance mortgage loans that did not meet HUD underwriting requirements.
Between 2009 and August 2010, up to 60 percent of the loans administered by MetLife Bank had “the most serious deficiencies,” the news release says. MetLife Bank’s senior managers, including the CEO and board of directors, were aware of the troubling statistics, according to the release.
