{"id":12478,"date":"2015-06-01T17:14:28","date_gmt":"2015-06-02T00:14:28","guid":{"rendered":"https:\/\/cjnotebook.com\/?p=12478"},"modified":"2015-06-01T17:14:28","modified_gmt":"2015-06-02T00:14:28","slug":"bank-agrees-to-pay-212-5-million-for-underwriting-bad-mortgage-loans","status":"publish","type":"post","link":"https:\/\/cjnotebook.com\/?p=12478","title":{"rendered":"Bank Agrees to Pay $212.5 Million for Underwriting Bad Mortgage Loans"},"content":{"rendered":"

 <\/p>\n

TENNESSEE<\/strong><\/p>\n

\n

 <\/p>\n

\"HUD\"<\/a>First Tennessee Bank N.A.<\/strong> \u00a0agreed to pay $212.5 million for underwriting bad mortgage loans that were insured by the U.S. Department of Housing and Urban Development and the Federal Housing Administration, authorities announced today.<\/p>\n

The loans didn’t meet applicable legal requirements, the Department of Justice stated.<\/p>\n

\n

\u201cFirst Tennessee\u2019s reckless underwriting has resulted in significant losses of federal funds and was precisely the type of conduct that caused the financial crisis and housing market downturn,\u201d said Deputy Assistant Attorney General Benjamin C. Mizer of the Justice Department\u2019s Civil Division.\u00a0<\/strong> \u201cWe will continue to hold accountable lenders who put profits before both their legal obligations and their customers, and restore wrongfully claimed funds to FHA and the treasury.\u201d<\/p>\n<\/blockquote>\n

Between January 2006 and October 2008, officials stated that First Tennessee, through its subsidiary First Horizon Home Loans Corporation,<\/strong> participated in the FHA insurance program as a Direct Endorsement Lender or DEL.<\/strong><\/p>\n

As a DEL, First Tennessee had the authority to originate, underwrite and endorse mortgages for FHA insurance.\u00a0 If a DEL such as First Tennessee approves a mortgage loan for FHA insurance and the loan later defaults, the holder of the loan may submit an insurance claim to HUD, FHA\u2019s parent agency, for the losses resulting from the defaulted loan.<\/p>\n

Under the DEL program, neither the FHA nor HUD reviews a loan before it is endorsed for FHA insurance.<\/p>\n

DELs such as First Tennessee are therefore required to follow program rules designed to ensure that they are properly underwriting and certifying mortgages for FHA insurance.<\/p>\n

In August 2008, First Tennessee sold First Horizon<\/strong> to MetLife Bank N.A. (MetLife)<\/strong>, a wholly-owned subsidiary of MetLife Inc., which thereafter originated FHA-insured mortgages under the MetLife name.<\/p>\n

In February 2015, MetLife agreed to pay $123.5 million to resolve its False Claims Act liability arising from its FHA originations after it acquired First Horizon from First Tennessee.<\/p>\n

\u201cFirst Tennessee admitted failings that resulted in poor quality FHA loans,\u201d said Acting U.S. Attorney John A. Horn of the Northern District of Georgia.\u00a0<\/strong> \u201cWhile First Tennessee profited from these loans, taxpayers incurred substantial losses when the loans defaulted.\u00a0 The settlement, as well as the investigation that preceded it, illustrates that the Department of Justice will closely scrutinize entities that cause financial injury to the government, and, in turn, the American taxpayer.\u201d<\/p>\n

The settlement announced today resolves allegations that First Tennessee failed to comply with FHA origination, underwriting and quality control requirements.<\/p>\n

As part of the settlement, First Tennessee admitted to the following facts:<\/p>\n

    \n
  • From January 2006 through October 2008, it repeatedly certified for FHA insurance mortgage loans that did not meet HUD underwriting requirements.<\/li>\n
  • Beginning in late 2007, First Tennessee significantly increased its FHA originations.<\/li>\n
  • The quality of First Tennessee\u2019s FHA underwriting significantly decreased during 2008 as its FHA lending increased.<\/li>\n
  • Beginning no later than early 2008, First Tennessee became aware that a substantial percentage of its FHA loans were not eligible for FHA mortgage insurance due to its own quality control findings.<\/li>\n
  • These findings were routinely shared with First Tennessee\u2019s senior managers.<\/li>\n
  • Despite internally acknowledging that hundreds of its FHA mortgages had material deficiencies, and despite its obligation to self-report findings of material violations of FHA requirements, First Tennessee failed to report even a single deficient mortgage to FHA.<\/li>\n
  • First Tennessee\u2019s conduct caused FHA to insure hundreds of loans that were not eligible for insurance and, as a result, FHA suffered substantial losses when it later paid insurance claims on those loans.<\/li>\n<\/ul>\n

    \u201cOur investigation found that First Tennessee caused FHA to pay claims on loans that the bank never should have approved and insured in the first place,\u201d said HUD Inspector General David A. Montoya.\u00a0<\/strong> \u201cThis settlement reinforces my commitment to combat fraud in the origination of single family mortgages insured by the FHA and makes certain that only qualified, creditworthy borrowers who can repay their mortgages are approved under the FHA program.\u201d<\/p>\n

     <\/p>\n","protected":false},"excerpt":{"rendered":"

      TENNESSEE   First Tennessee Bank N.A. \u00a0agreed to pay $212.5 million for underwriting bad mortgage loans that were insured by the U.S. Department of Housing and Urban Development and the Federal…<\/p>\n","protected":false},"author":1,"featured_media":12480,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[16,3],"tags":[659],"class_list":["post-12478","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-home-main-slider","category-u-s-department-of-justice","tag-mortgage"],"yoast_head":"\nBank Pays Millions for Underwriting Bad Mortgage Loans<\/title>\n<meta name=\"description\" content=\"First Tennessee Bank Pays $212.5 Million for Underwriting Bad Mortgage Loans\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/cjnotebook.com\/?p=12478\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Bank Pays Millions for Underwriting Bad Mortgage Loans\" \/>\n<meta property=\"og:description\" content=\"First Tennessee Bank Pays $212.5 Million for Underwriting Bad Mortgage Loans\" \/>\n<meta property=\"og:url\" content=\"https:\/\/cjnotebook.com\/?p=12478\" \/>\n<meta property=\"og:site_name\" content=\"American Justice Notebook\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/AmericanJusticeNotebook\" \/>\n<meta property=\"article:published_time\" content=\"2015-06-02T00:14:28+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/cjnotebook.com\/wp-content\/uploads\/2015\/06\/First-Tennessee-Bank.jpeg\" \/>\n\t<meta property=\"og:image:width\" content=\"314\" \/>\n\t<meta property=\"og:image:height\" content=\"132\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"Raul\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Raul\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"3 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\\\/\\\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\\\/\\\/cjnotebook.com\\\/?p=12478#article\",\"isPartOf\":{\"@id\":\"https:\\\/\\\/cjnotebook.com\\\/?p=12478\"},\"author\":{\"name\":\"Raul\",\"@id\":\"https:\\\/\\\/cjnotebook.com\\\/#\\\/schema\\\/person\\\/f5521baddca77b521f012298775186c0\"},\"headline\":\"Bank Agrees to Pay $212.5 Million for Underwriting Bad Mortgage Loans\",\"datePublished\":\"2015-06-02T00:14:28+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\\\/\\\/cjnotebook.com\\\/?p=12478\"},\"wordCount\":658,\"commentCount\":0,\"publisher\":{\"@id\":\"https:\\\/\\\/cjnotebook.com\\\/#organization\"},\"image\":{\"@id\":\"https:\\\/\\\/cjnotebook.com\\\/?p=12478#primaryimage\"},\"thumbnailUrl\":\"https:\\\/\\\/cjnotebook.com\\\/wp-content\\\/uploads\\\/2015\\\/06\\\/First-Tennessee-Bank.jpeg\",\"keywords\":[\"Mortgage\"],\"articleSection\":[\"Home Main Slider\",\"U.S. Department of Justice\"],\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"CommentAction\",\"name\":\"Comment\",\"target\":[\"https:\\\/\\\/cjnotebook.com\\\/?p=12478#respond\"]}]},{\"@type\":\"WebPage\",\"@id\":\"https:\\\/\\\/cjnotebook.com\\\/?p=12478\",\"url\":\"https:\\\/\\\/cjnotebook.com\\\/?p=12478\",\"name\":\"Bank Pays Millions for Underwriting Bad Mortgage Loans\",\"isPartOf\":{\"@id\":\"https:\\\/\\\/cjnotebook.com\\\/#website\"},\"primaryImageOfPage\":{\"@id\":\"https:\\\/\\\/cjnotebook.com\\\/?p=12478#primaryimage\"},\"image\":{\"@id\":\"https:\\\/\\\/cjnotebook.com\\\/?p=12478#primaryimage\"},\"thumbnailUrl\":\"https:\\\/\\\/cjnotebook.com\\\/wp-content\\\/uploads\\\/2015\\\/06\\\/First-Tennessee-Bank.jpeg\",\"datePublished\":\"2015-06-02T00:14:28+00:00\",\"description\":\"First Tennessee Bank Pays $212.5 Million for Underwriting Bad Mortgage Loans\",\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\\\/\\\/cjnotebook.com\\\/?p=12478\"]}]},{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\\\/\\\/cjnotebook.com\\\/?p=12478#primaryimage\",\"url\":\"https:\\\/\\\/cjnotebook.com\\\/wp-content\\\/uploads\\\/2015\\\/06\\\/First-Tennessee-Bank.jpeg\",\"contentUrl\":\"https:\\\/\\\/cjnotebook.com\\\/wp-content\\\/uploads\\\/2015\\\/06\\\/First-Tennessee-Bank.jpeg\",\"width\":314,\"height\":132},{\"@type\":\"WebSite\",\"@id\":\"https:\\\/\\\/cjnotebook.com\\\/#website\",\"url\":\"https:\\\/\\\/cjnotebook.com\\\/\",\"name\":\"American Justice Notebook\",\"description\":\""Our liberty depends on the freedom of the press, and that cannot be limited without being lost." \u2014 Thomas Jefferson\",\"publisher\":{\"@id\":\"https:\\\/\\\/cjnotebook.com\\\/#organization\"},\"potentialAction\":[{\"@type\":\"SearchAction\",\"target\":{\"@type\":\"EntryPoint\",\"urlTemplate\":\"https:\\\/\\\/cjnotebook.com\\\/?s={search_term_string}\"},\"query-input\":{\"@type\":\"PropertyValueSpecification\",\"valueRequired\":true,\"valueName\":\"search_term_string\"}}],\"inLanguage\":\"en-US\"},{\"@type\":\"Organization\",\"@id\":\"https:\\\/\\\/cjnotebook.com\\\/#organization\",\"name\":\"American Justice Notebook\",\"url\":\"https:\\\/\\\/cjnotebook.com\\\/\",\"logo\":{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\\\/\\\/cjnotebook.com\\\/#\\\/schema\\\/logo\\\/image\\\/\",\"url\":\"https:\\\/\\\/cjnotebook.com\\\/wp-content\\\/uploads\\\/2014\\\/07\\\/Justice-Scales.jpg\",\"contentUrl\":\"https:\\\/\\\/cjnotebook.com\\\/wp-content\\\/uploads\\\/2014\\\/07\\\/Justice-Scales.jpg\",\"width\":675,\"height\":231,\"caption\":\"American Justice Notebook\"},\"image\":{\"@id\":\"https:\\\/\\\/cjnotebook.com\\\/#\\\/schema\\\/logo\\\/image\\\/\"},\"sameAs\":[\"https:\\\/\\\/www.facebook.com\\\/AmericanJusticeNotebook\"]},{\"@type\":\"Person\",\"@id\":\"https:\\\/\\\/cjnotebook.com\\\/#\\\/schema\\\/person\\\/f5521baddca77b521f012298775186c0\",\"name\":\"Raul\",\"image\":{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\\\/\\\/secure.gravatar.com\\\/avatar\\\/c7f80bd073aca2abc2fc18e390e13d00b72d9d3a81bca4fd53e3567b02efee6f?s=96&r=g\",\"url\":\"https:\\\/\\\/secure.gravatar.com\\\/avatar\\\/c7f80bd073aca2abc2fc18e390e13d00b72d9d3a81bca4fd53e3567b02efee6f?s=96&r=g\",\"contentUrl\":\"https:\\\/\\\/secure.gravatar.com\\\/avatar\\\/c7f80bd073aca2abc2fc18e390e13d00b72d9d3a81bca4fd53e3567b02efee6f?s=96&r=g\",\"caption\":\"Raul\"},\"description\":\"Raul Hernandez is a former journalist. He has worked as a newspaper reporter for more than 30 years at the El Paso Herald-Post, El Paso Times, Press Enterprise in Riverside, California and the Ventura County Star in California. He was a court reporter for more than 20 years.\",\"sameAs\":[\"https:\\\/\\\/cjnotebook.com\\\/\"]}]}<\/script>\n<!-- \/ Yoast SEO plugin. -->","yoast_head_json":{"title":"Bank Pays Millions for Underwriting Bad Mortgage Loans","description":"First Tennessee Bank Pays $212.5 Million for Underwriting Bad Mortgage Loans","robots":{"index":"index","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"canonical":"https:\/\/cjnotebook.com\/?p=12478","og_locale":"en_US","og_type":"article","og_title":"Bank Pays Millions for Underwriting Bad Mortgage Loans","og_description":"First Tennessee Bank Pays $212.5 Million for Underwriting Bad Mortgage Loans","og_url":"https:\/\/cjnotebook.com\/?p=12478","og_site_name":"American Justice Notebook","article_publisher":"https:\/\/www.facebook.com\/AmericanJusticeNotebook","article_published_time":"2015-06-02T00:14:28+00:00","og_image":[{"width":314,"height":132,"url":"https:\/\/cjnotebook.com\/wp-content\/uploads\/2015\/06\/First-Tennessee-Bank.jpeg","type":"image\/jpeg"}],"author":"Raul","twitter_misc":{"Written by":"Raul","Est. reading time":"3 minutes"},"schema":{"@context":"https:\/\/schema.org","@graph":[{"@type":"Article","@id":"https:\/\/cjnotebook.com\/?p=12478#article","isPartOf":{"@id":"https:\/\/cjnotebook.com\/?p=12478"},"author":{"name":"Raul","@id":"https:\/\/cjnotebook.com\/#\/schema\/person\/f5521baddca77b521f012298775186c0"},"headline":"Bank Agrees to Pay $212.5 Million for Underwriting Bad Mortgage Loans","datePublished":"2015-06-02T00:14:28+00:00","mainEntityOfPage":{"@id":"https:\/\/cjnotebook.com\/?p=12478"},"wordCount":658,"commentCount":0,"publisher":{"@id":"https:\/\/cjnotebook.com\/#organization"},"image":{"@id":"https:\/\/cjnotebook.com\/?p=12478#primaryimage"},"thumbnailUrl":"https:\/\/cjnotebook.com\/wp-content\/uploads\/2015\/06\/First-Tennessee-Bank.jpeg","keywords":["Mortgage"],"articleSection":["Home Main Slider","U.S. Department of Justice"],"inLanguage":"en-US","potentialAction":[{"@type":"CommentAction","name":"Comment","target":["https:\/\/cjnotebook.com\/?p=12478#respond"]}]},{"@type":"WebPage","@id":"https:\/\/cjnotebook.com\/?p=12478","url":"https:\/\/cjnotebook.com\/?p=12478","name":"Bank Pays Millions for Underwriting Bad Mortgage Loans","isPartOf":{"@id":"https:\/\/cjnotebook.com\/#website"},"primaryImageOfPage":{"@id":"https:\/\/cjnotebook.com\/?p=12478#primaryimage"},"image":{"@id":"https:\/\/cjnotebook.com\/?p=12478#primaryimage"},"thumbnailUrl":"https:\/\/cjnotebook.com\/wp-content\/uploads\/2015\/06\/First-Tennessee-Bank.jpeg","datePublished":"2015-06-02T00:14:28+00:00","description":"First Tennessee Bank Pays $212.5 Million for Underwriting Bad Mortgage Loans","inLanguage":"en-US","potentialAction":[{"@type":"ReadAction","target":["https:\/\/cjnotebook.com\/?p=12478"]}]},{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/cjnotebook.com\/?p=12478#primaryimage","url":"https:\/\/cjnotebook.com\/wp-content\/uploads\/2015\/06\/First-Tennessee-Bank.jpeg","contentUrl":"https:\/\/cjnotebook.com\/wp-content\/uploads\/2015\/06\/First-Tennessee-Bank.jpeg","width":314,"height":132},{"@type":"WebSite","@id":"https:\/\/cjnotebook.com\/#website","url":"https:\/\/cjnotebook.com\/","name":"American Justice Notebook","description":""Our liberty depends on the freedom of the press, and that cannot be limited without being lost." \u2014 Thomas Jefferson","publisher":{"@id":"https:\/\/cjnotebook.com\/#organization"},"potentialAction":[{"@type":"SearchAction","target":{"@type":"EntryPoint","urlTemplate":"https:\/\/cjnotebook.com\/?s={search_term_string}"},"query-input":{"@type":"PropertyValueSpecification","valueRequired":true,"valueName":"search_term_string"}}],"inLanguage":"en-US"},{"@type":"Organization","@id":"https:\/\/cjnotebook.com\/#organization","name":"American Justice Notebook","url":"https:\/\/cjnotebook.com\/","logo":{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/cjnotebook.com\/#\/schema\/logo\/image\/","url":"https:\/\/cjnotebook.com\/wp-content\/uploads\/2014\/07\/Justice-Scales.jpg","contentUrl":"https:\/\/cjnotebook.com\/wp-content\/uploads\/2014\/07\/Justice-Scales.jpg","width":675,"height":231,"caption":"American Justice Notebook"},"image":{"@id":"https:\/\/cjnotebook.com\/#\/schema\/logo\/image\/"},"sameAs":["https:\/\/www.facebook.com\/AmericanJusticeNotebook"]},{"@type":"Person","@id":"https:\/\/cjnotebook.com\/#\/schema\/person\/f5521baddca77b521f012298775186c0","name":"Raul","image":{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/secure.gravatar.com\/avatar\/c7f80bd073aca2abc2fc18e390e13d00b72d9d3a81bca4fd53e3567b02efee6f?s=96&r=g","url":"https:\/\/secure.gravatar.com\/avatar\/c7f80bd073aca2abc2fc18e390e13d00b72d9d3a81bca4fd53e3567b02efee6f?s=96&r=g","contentUrl":"https:\/\/secure.gravatar.com\/avatar\/c7f80bd073aca2abc2fc18e390e13d00b72d9d3a81bca4fd53e3567b02efee6f?s=96&r=g","caption":"Raul"},"description":"Raul Hernandez is a former journalist. He has worked as a newspaper reporter for more than 30 years at the El Paso Herald-Post, El Paso Times, Press Enterprise in Riverside, California and the Ventura County Star in California. He was a court reporter for more than 20 years.","sameAs":["https:\/\/cjnotebook.com\/"]}]}},"_links":{"self":[{"href":"https:\/\/cjnotebook.com\/index.php?rest_route=\/wp\/v2\/posts\/12478","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/cjnotebook.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/cjnotebook.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/cjnotebook.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/cjnotebook.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=12478"}],"version-history":[{"count":4,"href":"https:\/\/cjnotebook.com\/index.php?rest_route=\/wp\/v2\/posts\/12478\/revisions"}],"predecessor-version":[{"id":12484,"href":"https:\/\/cjnotebook.com\/index.php?rest_route=\/wp\/v2\/posts\/12478\/revisions\/12484"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/cjnotebook.com\/index.php?rest_route=\/wp\/v2\/media\/12480"}],"wp:attachment":[{"href":"https:\/\/cjnotebook.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=12478"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/cjnotebook.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=12478"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/cjnotebook.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=12478"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}