WASHINGTON—Department of Housing and Urban Development (HUD) Secretary Ben Carson announced the agency has reached an agreement with the Department of Justice (DOJ) to clarify and reduce penalties for underwriting errors on mortgage loans made through the Federal Housing Administration (FHA).
The penalties were assessed under the False Claims Act. Legal action and settlements under the law – given out primarily as a result of the 2008 financial crisis – have led some financial institutions to stop issuing FHA loans, creating a void that has been filled by non-depository lenders, NAFCU explained.
Carson, while announcing HUD's Memorandum of Understanding with the DOJ, noted that depository institutions "represented nearly half of FHA's lender base in 2010, [but] represent just 15% today."