The Department of Justice has announced that MetLife Home Loans (as successor to MetLife Bank) has agreed to pay $123.5 million to settle allegations that the bank knowingly originated and underwrote mortgage loans that did not meet requirements to be insured by the U.S. Department of Housing and Urban Development’s Federal Housing Administration:

During the time period covered by the settlement, MetLife Bank participated as a Direct Endorsement Lender (DEL) in the FHA insurance program.  A DEL has the authority to originate, underwrite and certify mortgages for FHA insurance.  If a loan certified for FHA insurance later defaults, the holder of the loan may submit an insurance claim to the FHA for the losses resulting from the defaulted loan.  Because the FHA does not review the underwriting of a loan before it is endorsed for FHA insurance, the FHA depends on a DEL to follow program rules to ensure that only eligible loans are submitted for FHA insurance.

Additionally, the bank allegedly failed to disclose fully the findings of its own quality control audits, which showed that 25 to 60 percent of the loans contained material or significant defects, and downgraded the risks related to FHA loans.

Read the entire press release, “MetLife Home Loans LLC, Successor to MetLife Bank N.A., to Pay $123.5 Million to Resolve Alleged Federal Housing Administration Mortgage Lending Violations”