Guild Mortgage Company to Pay $24.9 Million to Resolve Allegations it Knowingly Caused False Claims for Federal Mortgage insurance

Guild Mortgage Company has agreed to pay the United States $24.9 million to resolve allegations that it violated the False Claims Act by knowingly breaching material program requirements when it originated and underwrote mortgages insured by the Department of Housing and Urban Development’s (HUD) Federal Housing Administration (FHA), the Department of Justice announced today.  Guild Mortgage Company is headquartered in San Diego, California, with branches across the United States.

“Ensuring the integrity of federal lending programs is important to keeping those programs financially sound,” said Acting Assistant Attorney General Jeffrey Bossert Clark of the Department of Justice’s Civil Division.  “Together with our partners at HUD, we have worked hard to hold accountable FHA lenders that knowingly and materially violate program requirements that help Americans achieve the dream of home ownership.”

“The United States is committed to providing Americans opportunities to own their own homes,” said Acting U.S. Attorney for the District of Columbia Michael R. Sherwin.  “This settlement reflects the diligent work of officials from the Department of Justice and HUD to ensure that the programs that provide those opportunities are operated with integrity and in accordance with requirements established by law.”

“As this settlement demonstrates, we are committed to holding mortgage lenders accountable when they choose to abuse the integrity of vital government programs that are designed to assist homeownership,” said U.S. Attorney Robert Brewer for the Southern District of California.  “We also commend the whistleblower for coming forward, exposing these wrongs, and working with the government investigative team.”

“The Federal Housing Administration insurance program is a critical tool that helps hardworking Americans achieve their dream of homeownership.  Any abuse of that program is unacceptable and the bad actors will be held accountable,” said Rae Oliver Davis, U.S. HUD Inspector General.  “This case highlights the effectiveness and the importance of whistleblower programs.” 

Participants in the FHA mortgage insurance program are authorized to originate and underwrite mortgages without first having the government review the loans for compliance with the agency’s underwriting and origination requirements.  If an FHA-insured loan defaults, the holder of the loan can then recover from the United States for certain losses.  Lenders must follow FHA rules to ensure that only mortgages that meet critical credit and underwriting criteria are insured by the government. 

The settlement announced today resolves allegations that Guild Mortgage Company knowingly approved materially ineligible loans that later defaulted and resulted in claims to FHA for mortgage insurance, failed to comply with material program rules that require lenders to maintain quality control programs to prevent and correct underwriting deficiencies, and failed to self-report materially deficient loans that it identified.

The agreement resolves allegations brought by the former head of quality control at Guild Mortgage Company, Kevin Dougherty, under the qui tam, or whistleblower, provisions of the False Claims Act, which permit private parties to sue on behalf of the government for false claims and to receive a share of any recovery.  The Act permits the United States to intervene in such a lawsuit, as it did in part here.  Dougherty will receive $4,980,000 as his share of the government’s recovery.

The investigation, litigation, and settlement were the result of a coordinated effort among the Commercial Litigation Branch of the Department of Justice’s Civil Division, the U.S. Attorneys’ Offices for the District of Columbia and the Southern District of California, HUD, and HUD-OIG. 

The qui tam case is captioned United States ex rel. Dougherty v. Guild Mortgage Company, Civ. A. No. 16-2909 (S.D. Cal.). 

The claims asserted against the defendant are allegations only, and there has been no determination of liability.

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    The number of disability claims for veterans living abroad—in foreign countries or U.S. territories—increased 14 percent from fiscal years 2014 to 2019. During this time period, claims processing time frames improved. In fiscal year 2019, the Veterans Benefits Administration (VBA) of the Department of Veterans Affairs (VA) approved comparable percentages of disability claims for veterans living abroad and domestically—63 percent and 64 percent respectively. However, for a subset of these claims—those where veterans likely received a disability medical exam scheduled by Department of State (State) embassy staff—approval rates were often lower. Veterans' access to disability medical exams abroad improved as VBA has increasingly relied on contracted examiners, rather than embassy-referred examiners, to conduct these exams. According to VBA, this shift expanded the pool of trained examiners abroad and increased the frequency and depth of VBA's quality reviews for contract exams. These quality reviews help VBA and its contractor identify and address common errors, according to VBA and contractor officials. However, several factors continue to limit some veterans' ability to access quality disability medical exams (see figure). Factors That Impair the Access of Veterans Living Abroad to Quality Disability Medical Exams Unknown quality of certain exams: A subset of veterans living abroad receive disability medical exams from an embassy-referred provider. VBA does not systematically assess the quality of these exams. Without doing so, VBA cannot determine if such exams affect the approval rates of veterans who receive them or contribute to longer processing times and are unable to make informed decisions about their use. Travel reimbursement: Under current VA regulations, VA is not authorized to reimburse veterans for travel expenses for certain services incurred in foreign countries as it is for those incurred within the United States, including U.S. territories. Consequently, some veterans living in foreign countries may be unable to afford to travel to exams. Examiner reimbursement: The Veterans Health Administration's (VHA) Foreign Medical Program reimburses examiners referred by embassy staff via paper checks in U.S. currency. These checks may be slow to arrive and not accepted by foreign banks, according to State and other officials and staff we interviewed. Such payment issues can deter examiners from being willing to conduct disability medical exams and thus limit veterans' access to these exams in foreign countries. Of the roughly 1 million disability claims VBA processed in fiscal year 2019, 18,287 were for veterans living abroad. Veterans living abroad are entitled to the same disability benefits as those living domestically, but GAO previously reported that veterans living abroad may not be able to access disability medical exams as readily as their domestic counterparts. VBA uses medical exam reports to help determine if a veteran should receive disability benefits. GAO was asked to review the disability claims and exam processes for veterans living abroad. Among other things, this report examines disability claims trends for veterans living abroad and these veterans' ability to access quality disability medical exams. GAO analyzed VBA claims data for fiscal years 2014 to 2019; assessed data reliability; reviewed relevant federal laws, regulations, policies, and contract documents; and interviewed employees of VBA, State, and other stakeholders. GAO is making five recommendations, including that VBA assess the quality of embassy-referred exams, VBA and VHA assess whether to reimburse beneficiaries for travel to disability medical exams in foreign countries, and that VBA and VHA pay examiners located by embassy staff electronically. The Department of Veterans Affairs concurred with GAO's recommendations. For more information, contact Elizabeth Curda at (202) 512-7215 or curdae@gao.gov.
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  • U.S. Citizen Charged with Murder of Department of Defense Employee in Bahrain
    In Crime News
    A U.S. citizen arrived in the United States today after being ordered detained and removed from Bahrain to the United States for the alleged murder of his mother, a Department of Defense civilian employee working in Bahrain.
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  • Assistant Attorney General John C. Demers Delivers Remarks on the National Security Cyber Investigation into North Korean Operatives
    In Crime News
    Today, the Justice Department is announcing charges following a significant national security cyber investigation first disclosed publicly more than two years ago.
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  • Secretary Antony J. Blinken With Wolf Blitzer of CNN’s The Situation Room
    In Crime Control and Security News
    Antony J. Blinken, [Read More…]
  • Texas Woman Indicted for Transporting Minor for Female Genital Mutilation
    In Crime News
    A Texas woman has been indicted for transporting a minor from the United States to a foreign country for the purpose of female genital mutilation (FGM).
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  • Acting Assistant Attorney General Brian Rabbitt Delivers Remarks at the PPP Criminal Fraud Enforcement Action Press Conference
    In Crime News
    Over the course of the past six months, the COVID-19 pandemic has wreaked havoc across our country and presented unprecedented challenges for ordinary Americans from all walks of life. 
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  • Minnesota Man Pleads Guilty to Providing Material Support to ISIS
    In Crime News
    The Justice Department today announced the guilty plea of Abdelhamid Al-Madioum, 24, to one count of providing material support and resources, namely personnel and services, to ISIS, a designated foreign terrorist organization.
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  • Child Welfare and Aging Programs: HHS Could Enhance Support for Grandparents and Other Relative Caregivers
    In U.S GAO News
    In 2018, an estimated 2.7 million children lived with kin caregivers— grandparents, other relatives, or close family friends—because their parents were unable to care for them. Most of these children were cared for outside the foster care system, which can affect the types of services and supports available. While children did not live with parents for a variety of reasons, parental substance abuse and incarceration were often cited in data and in interviews with program officials. Most Children Living with Kin Are Not in Foster Care, 2018 Challenges faced by kin caregivers include having limited financial resources and needing legal assistance, particularly when caring for children outside foster care, according to survey data and studies GAO reviewed. This is, in part, because licensed foster parents generally receive foster care maintenance payments and other services. Officials in selected communities said they have addressed some challenges by, for example, providing temporary payments or legal representation to eligible kin caregivers. However, officials also said that program eligibility criteria or insufficient funds can limit availability or result in waiting lists. The Department of Health and Human Services (HHS) provides technical assistance and other support to help states use federal programs and initiatives established to serve kin caregivers. HHS officials said that these programs are optional, so they mainly provide assistance in response to states' requests. However, this approach has not led to widespread use. For example, 23 states used the option under the National Family Caregiver Support Program to serve older relative caregivers with 1 percent or more of their fiscal year 2016 funds (spent through 2018). State officials said they would like more guides or tools for using these programs. By not proactively sharing information and best practices, HHS may be missing opportunities to help states better support kin caregivers. Grandparents and other kin often step in to provide stability and security when parents cannot care for their children. Taking on this responsibility can lead to significant hardships, especially for older caregivers. GAO was asked to study the challenges faced by grandparents and other older kin when becoming primary caregivers. This report examines (1) what is known about the numbers of grandparents and other kin serving as primary caregivers for children, and the reasons for that care; (2) challenges kin caregivers face and how officials report addressing them in selected communities; and (3) the extent to which HHS has supported states' efforts to use relevant federal programs and initiatives. GAO analyzed U.S. Census Bureau survey and HHS administrative data; reviewed relevant literature, federal laws, regulations, guidance, and other documents; and interviewed officials from HHS, national organizations, and in four states (Mississippi, New Mexico, New York, and Ohio) and communities, selected for their relatively large numbers of grandparent caregivers and to reflect geographic and demographic diversity. GAO is making two recommendations to HHS on sharing information and best practices with states about federal programs that serve kin caregivers. HHS did not concur, stating that the agency already provides ongoing support. GAO maintains that implementing these recommendations would be helpful. For more information, contact Kathryn A. Larin at (202) 512-7215 or larink@gao.gov.
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  • Secretary Michael R. Pompeo and Bahraini Foreign Minister Al Zayani at the U.S.-Bahrain Strategic Dialogue
    In Crime Control and Security News
    Michael R. Pompeo, [Read More…]
  • Secretary Michael R. Pompeo and Saudi Foreign Minister Prince Faisal bin Farhan Al Saud After Their Meeting
    In Crime Control and Security News
    Michael R. Pompeo, [Read More…]