M&T Bank has agreed to pay $64 million to settle allegations that it knowingly originated loans insured by the Department of Housing and Urban Development and the Federal Housing Administration that didn’t meet requirements.
The Department of Justice alleged that M&T, while participating as a direct lender in the FHA
insurance program, didn’t comply with FHA originating, underwriting and quality control requirements, and that it knowingly originated and underwrote loans that didn’t meet FHA standards.
“Mortgage lenders that fail to follow FHA program rules put taxpayer funds at risk and increase the changes of borrowers losing their homes,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, who heads up the DOJ’s Civil Division. “We will continue to hold lenders accountable for knowingly submitting ineligible loans for FHA insurance.
“M&T Bank bypassed its responsibility to originate and underwrite mortgages in accordance with the standards required by the FHA,” said James P. Kennedy Jr., First Assistant U.S. Attorney for the Western District of New York. “This case demonstrates that when a financial institution takes such a detour, we will work to ensure that it does not bypass the consequences of that conduct.”
The CFPB’s intent with TRID was for customers to ‘know before they owe.’ And a new survey indicates that more homebuyers are reviewing their mortgage documents prior to closing.