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DOJ Sues another FHA Lender
A New York mortgage company has been sued by the U.S.rnDepartment of Justice (DOJ) for alleged fraud against the Federal HousingrnAdministration (FHA). Golden FirstrnMortgage Corporation and its president David Movtady are accused of having “repeatedlyrnlied” to the government between 2002 and 2010 to win FHA insurance for itsrnloans. These loans were, the suitrnalleges, of poor quality and ultimately cost taxpayers millions of dollars.</p
FHA does not review home loans before approving them,rnrelying on its lenders to underwrite them in accordance with governmentrnguidelines to ensure their creditworthiness. rnGolden First is said to have submitted false certifications that it hadrnconducted proper due diligence. Insteadrnthe Great Neck Long Island company emphasized speed and volume over quality andrnoffered kickbacks to its employees to ramp up production. Supposedly three employees closed 100 to 200rnloans each month which would make proper underwriting virtually impossible. </p
The company had a default rate that topped 60 percent onrn$707 million in loans made during the subject period and the FHA has paid more than $12.3 million inrninsurance claims on Golden First loans since July 2007. The suit, brought underrnthe Financial Institutions Reform, Recovery and Enforcement Act (FIRREA) whichrnhas a ten year statute of limitations, and the False Claims Act seeks triplerndamages, fines, and compensatory damages.</p
“Golden First and David Movtadyrnchurned out bad loans and lied about their compliance with HUD requirements,rnleaving taxpayers on the hook for millions of dollars when the loans inevitablyrndefaulted,” U.S. Attorney Preet Bharara in Manhattan said in a statement.
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