Flagstar To Pay Up To $133M For Approving Bad Loans

Law360, New York (February 24, 2012, 10:15 PM EST) -- Flagstar Bancorp. Inc. agreed Friday to pay up to $132.8 million to settle False Claims Act allegations that the bank improperly endorsed federally-insured mortgage loans that eventually defaulted and falsely certified its loan underwriting practices to federal housing authorities.

The U.S. Department of Justice filed the complaint and settlement stipulation in New York federal court, claiming Flagstar's actions were in violation of the Direct Endorsement Lender program, a program run by the Federal Housing Administration and U.S. Department of Housing and Urban Development that authorizes private...
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