The U.S. Department of Justice (DOJ) announced the former mortgage lender James B. Nutter & Company, has agreed to a $2.4 million settlement to resolve allegations that it knowingly underwrote Home Equity Conversion Mortgages (HECM) insured by the Federal Housing Administration (FHA) that did not meet program eligibility requirements.
The Kansas City-based company was sued in 2020, with the DOJ claiming the company allowed inexperienced temporary staff to underwrite FHA-insured loans and submit the loans for FHA insurance with underwriter signatures that were falsified and/or affixed before all the documentation the underwriter should have reviewed was complete. The company was accused of running afoul of the False Claims Act and the Financial Institutions Reform, Recovery and Enforcement Act of 1989.
The company was founded in 1951 and was operating as Nutter Home Loans when it exited the mortgage business in 2022, citing the DOJ lawsuit as being a chief reason for its closure. At the peak of its operations, Nutter serviced $7 billion in loans on homes.
“The HECM program helps support our nation’s senior citizens by providing an additional source of funds to supplement their income,” said Principal Deputy Assistant Attorney General Brian M. Boynton, head of the Justice Department’s Civil Division. “Together with our partners at HUD, we are committed to protecting the financial integrity of this critical program and to pursuing those who seek to abuse it.”
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How does the settlement help seniors that have these types of loans?
Will the seniors receive any modification to their current loans or any compensation?