The U.S. Court of Appeals for the Eleventh Circuit has revived a qui tam whistleblower lawsuit that alleges defunct mortgage lender Mortgage Investors Corporation (“MIC”) defrauded a U.S. Department of Veterans Affairs (“VA”) lending program, holding that the lower court erred in granting summary judgment in favor of MIC.

The case involves a VA lending program designed to help veterans stay in their homes by allowing them to refinance existing VA-backed mortgages at more favorable terms.  Lenders who participate in the program must certify they will not charge certain impermissible fees to veteran borrowers.  In return, the VA insures the loans, reducing the risk that lenders take. 

The whistleblowers allege, however, that despite certifying otherwise, MIC charged veterans impermissible fees and then attempted to cover-up those fees.  The Eleventh Circuit held that there was sufficient evidence that MIC’s certifications that it would not charge certain fees to borrowers was “material” to the VA’s decision to guarantee nearly 3,000 loans to veterans such that the case should proceed to trial.  According to the whistleblowers, the VA lost more than $248 million from this scheme.

Read the article here.