WASHINGTON–Secretary of Housing and Urban Development Ben Carson is promising to help banks to get more comfortable when it comes to financing lower-income borrowers, and that includes addressing fears over being penalized for immaterial mortgage lending errors.
Carson said he recognizes concerns over what some have called excessive use of the False Claim Act (FCA), the government’s primary civil remedy to redress false claims for government funds. Lenders participating in HUD’s Federal Housing Administration (FHA) mortgage insurance programs have had to pay billions of dollars in FCA penalties since the financial crisis.
Prior to 2014, FCA scrutiny largely focused on fraud committed against federal healthcare programs and in defense contracts.
In an earlier letter to shareholders, JPMorgan Chase & Co. CEO Jamie Dimon said “FCA settlements wiped out a decade of FHA profitability,” wrote Dimon in a letter to shareholders.
In remarks to the Mortgage Bankers Association's Annual Convention, Carson said, “Innocent errors should not create chaos and fear and make people less likely to get involved in the first place."
Carson had also previously addressed FCA-related issues when he testified before the House Financial Services Committee earlier this month, during which he said “the long-term effects of that (FCA) escalation is obviously providing fewer appropriate choices for consumers, and that’s exactly the opposite of what we should be doing.”