4514 Cole Ave, #600, Dallas, Texas 75205
Call Steve 214-306-8045 Call Steve 214-306-8045

Finance of America Mortgage to Pay $14.5 Million to Settle FHA Fraud Whistleblower Lawsuit

The U.S. Department of Justice has announced that Finance of America Mortgage, LLC, has agreed to pay the federal government $14.5 million to settle a lawsuit involving mortgage fraud brought under the False Claims Act.

The case related to Federal Housing Administration (FHA) loans originated by Gateway Funding Diversified Mortgage Services, a company acquired by Finance of America in 2015. The lawsuit was originally filed by Debra McGeehan, who was a quality control underwriter for Gateway between 2009 and 2015. The federal government took up the case under the qui tam provisions of the False Claims Act.

Former employee alleges fraudulent practices

The U.S. Department of Housing and Urban Development (HUD) runs the FHA mortgage program, insuring FHA loans that meet the requirements set by the department. These loans can be lucrative for lenders looking for compensation from HUD for losses sustained if a lender defaults on the loan. The agency requires lenders to self-report loans that contain underwriting mistakes.

According to the settlement, Gateway failed to establish and maintain a quality control program as necessitated by HUD’s terms for participation in the FHA loan program. When some members of Gateway management notified the company that its loans were defaulting at a high rate, the company still failed to comply with the self-reporting requirements under HUD rules. This resulted in the agency incurring substantial losses when loans would default, as insurance payments would go to Gateway.

McGeehan recovered nearly $2.4 million for her role in blowing the whistle on the wrongdoing committed by Gateway, now under the ownership of Finance of America.

If you have actionable information about fraud being committed in your workplace, speak with a trusted whistleblower attorney at Kardell Law Group for more information about how you can proceed. You may be entitled to compensation and federal protections.


Contact Form

We will respond to your inquiry in a timely fashion. Thank you.

Quick Contact Form