|HUD No. 11-095
May 20, 2011
HUD ANNOUNCES $1.2 MILLION SETTLEMENT WITH U.S. BANK
WASHINGTON - The U.S. Department of Housing and Urban Development (HUD) today announced a settlement with Minneapolis-based U.S. Bank, National Association, the Federal Housing Administration's (FHA) 8th largest mortgage lender.
Under the terms of the settlement announced today, U.S. Bank will pay $1.2 million to resolve allegations that it failed to comply with FHA requirements in connection with 27 mortgage loans. U.S. Bank did not admit any liability. HUD documented losses of more than $465,000 in relation to these loans.
"FHA's underwriting and endorsement standards exist to protect its insurance fund and every family hoping to sustain homeownership," said HUD General Counsel Helen Kanovsky. "We expect our lenders to uphold those standards and we will hold them accountable when they don't."
The agreement follows a 2006 audit by HUD's Office of Inspector General, which concluded that U.S. Bank failed to meet FHA underwriting standards in connection with mortgage loans originated in 2003 and 2004. FHA generally prohibits the inclusion of overdue principal, interest and late charges in refinanced loans; however the audit found that in some cases U.S. Bank refinanced loans that included such prohibited amounts, among other violations of FHA underwriting requirements. The audit also found that U.S. Bank submitted loans that were in default to HUD for late endorsement. FHA requires that loans not be in default when they are submitted for late endorsement, or more than 60 days after closing.
HUD's Office of Program Enforcement referred the case to the U.S. Attorney's Office for the District of Minnesota, which settled the case.
HUD's mission is to create strong, sustainable, inclusive communities and quality affordable homes for all. HUD is working to strengthen the housing market to bolster the economy and protect consumers; meet the need for quality affordable rental homes: utilize housing as a platform for improving quality of life; build inclusive and sustainable communities free from discrimination; and transform the way HUD does business. More information about HUD and its programs is available on the Internet at www.hud.gov and espanol.hud.gov.