Lawsuit Filed Against Mortgage Lender Under False Claims Act

Education & Training with 123 ConEd LLC -- Michigan real estate continuing education School Sponsor 373

scalesHere is another example of a recent legal case involving a fraudulent real estate scheme, this time committed by a mortgage lender. I try to post case summaries in order to provide timely updates to real estate professionals on important issues.

Yesterday afternoon (Tuesday, June 9, 2009), the United States Department of Justice ("DOJ") filed a lawsuit against California mortgage lender Capmark Finance Inc., charging that Capmark violated the federal False Claims Act by making false statements on applications for federal mortgage insurance covering residential nursing homes. The lawsuit relates to a federal program under which the United States Department of Housing and Urban Development (“HUD”) guarantees mortgage loans used to acquire healthcare facilities such as hospitals and nursing homes.

The lawsuit alleges that Capmark made false statements in HUD applications to guarantee mortgage loans made to acquire the Canoga Care Center, a residential nursing home facility in California, and the Hudson Valley Care Center, located in New York. After accepting Capmark’s applications for mortgage insurance, HUD was forced to pay $25,895,701.21 when both the Canoga Care Center and Hudson Valley Care Center defaulted on their loans. Pursuant to the False Claims Act, the DOJ is seeking treble (triple) damages and penalties.

The lawsuit is an allegation of unlawful conduct. The allegations must still be proven in federal court.  I will try to follow this case and provide an update when the case is resolved.


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Roy Kelley
Realty Group Referrals - Gaithersburg, MD

HUD now claims that they are going after individuals as well as companies. Time for some industry house cleaning.

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Jun 10, 2009 12:33 AM #1
Mary Strang
Viroqua, WI

Some will be running for cover, that's an awful large loss.

Jun 10, 2009 01:09 AM #2
Tony and Suzanne Marriott, Associate Brokers
Haven Express @ Keller Williams Arizona Realty - Scottsdale, AZ
Serving Scottsdale, Phoenix and Maricopa County AZ

Any and all claims made by an agent in an effort to encourage / convince a prospect to work with them should be truthful.  Lying is unethical, dishonest and could be considered fraudulent.  Those that lie about Short Sale expertise are some of the worst - as their lies can lead homeowners to financial disaster.

Sep 02, 2010 01:14 PM #3
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