A lawsuit filed by a whistleblower against mortgage lender Academy Mortgage Corp. was settled for $38.5 million despite the Department of Justice wanting the case dismissed.
The suit was brought against Academy by its former underwriter Gwen Thrower under the qui tam provision of the False Claims Act. This provision permits a private party to file a lawsuit on behalf of the United States and receive a portion of any recovery.
In her lawsuit filed in the Federal District Court for the Northern District of California, Thrower alleged that from January 2008 through April 2017, Academy’s underwriting process had employees disregard Federal Housing Authority rules and falsely certify compliance with underwriting requirements. Thrower further alleged that, because of Academy’s knowingly deficient mortgage underwriting practices, the government paid insurance claims on loans improperly underwritten by Academy.
“Lenders that knowingly cause the government to guarantee loans that are materially deficient put both homeowners and the public fisc [treasury] at risk,” Principal Deputy Assistant Attorney General Brian Boynton, head of the Justice Department’s Civil Division, said. “The settlement announced today is a result of the relator’s efforts to develop this case in litigation and complements the department’s actions to prevent abuse of government programs designed to foster home ownership.”
Thrower pursued the case even after the Justice Department sought unsuccessfully to...
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