Legal Blog

Compensation and Compliance Matters: New Lawsuit Creates New Danger for HUD Foreclosures

ForeclosureA lawsuit alleges that lenders that fail to take required loss mitigation steps prior to foreclosing on Department of Housing and Urban Development loans have violated the False Claims Act. The gist of the complaint, which a legal aid group recently filed, is related to the fact that HUD makes payments to the lenders on these guaranteed mortgages. However, a condition of every HUD loan (and thus a condition supporting these payments) is that the lender must undertake certain loss mitigation measures before foreclosing on the loan. If the lender fails to take these steps and still receives the money from HUD based on the representation it would/did take such actions, it allegedly creates the basis for a False Claims Act action.

Click here to read the entire article on National Mortgage News.

 

akaren@offitkurman.com  | 240.507.1740

Bank Manager ReimbursementsAri Karen is an experienced litigator and speaker who has focused his practice in representing financial institutions in both government investigations and litigation before state and federal trial and appellate courts nationwide.

Mr. Karen’s practice is diverse, representing clients on matters concerning banking regulations, Dodd Frank financial reform laws, contractual disputes, employment and labor statutes, wage-hour class actions, employment discrimination and fair lending matters, whistleblower complaints and non-competition claims, among others.