11/27/2008

News / RBC Mortgage Company Pays U.S. More Than $10.71 Million to Settle Allegations Involving Federally Insured Mortgages

WASHINGTON – RBC Mortgage Company (RBC) has agreed to pay the United States more than $10.71 million to resolve allegations arising under the False Claims Act concerning 219 federally insured loans for mortgages submitted to the Federal Housing Administration (FHA) of the U.S. Department of Housing and Urban Development (HUD), the Justice Department announced today. The government alleged that, between 2001 and 2005, RBC, a subsidiary of the Royal Bank of Canada, falsified documentation in support of loan applications, violated due diligence underwriting requirements and improperly submitted loans for endorsement by HUD that were not eligible for FHA insurance.

RBC, a publicly traded Canadian corporation, maintained offices located throughout the United States including Rockford, Ill. RBC was a pre-approved lender with "Direct Endorsement Authority" to originate and process FHA loans without waiting for prior review of the application by HUD. The FHA program and the direct endorsement process are designed to help low and moderate income families purchase homes by lowering some of the costs associated with mortgage loans.

As a pre-approved lender, RBC was responsible for conducting due diligence in underwriting the loans by verifying each borrower’s qualifications. The mortgage firm also was obligated to meet other requirements established by regulations or HUD program guidance. RBC has not originated a mortgage loan since September 2005.

The settlement reached between RBC and the United States resolves these allegations. In addition to its agreement to pay more than $10.71 million, RBC has also agreed to pay $264,000 to resolve administrative claims with respect to 39 federally insured loans.

This settlement was reached through the collaborative efforts of the U.S. Attorney’s office for Northern District of Illinois, the Department of Housing and Urban Development’s Office of Inspector General and the Justice Department’s Civil Division.

http://www.usdoj.gov/opa/pr/2008/November/08-civ-1051.html

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