(CN) - MetLife will cough up $123.5 million to settle claims that it knowingly approved federally insured home loans for people who didn't qualify, the Justice Department said Wednesday.
As part of the settlement, MetLife Home Loans admitted that its predecessor - MetLife Bank - repeatedly certified for Federal Housing Administration insurance on mortgage loans that didn't meet federal underwriting requirements between 2008 and 2012.
Furthermore, MetLife admitted that the bank knew a large number of the loans were not eligible for FHA mortgage insurance through its own quality control practices. Between 2009 and 2010, the bank discovered that anywhere from 25 to 60 percent of these loans were seriously deficient - findings that were regularly shared with the bank's CEO and its directors, the Justice Department said.
Over a two year period, the bank self-identified 1,097 mortgages insured by the FHA that were seriously deficient but only reported 321 of them to the Department of Housing and Urban Development. As a result, FHA insured hundreds of home loans that weren't eligible - causing the agency to suffer serious losses when it later paid insurance claims on the loans, the Justice Department said.
"MetLife Bank's improper FHA lending practices not only wasted taxpayer funds, but also inflicted harm on homeowners and the housing market that lasts to this day," said Acting Assistant Attorney General Joyce R. Branda of the Justice Department's Civil Division. "As this settlement shows, we will continue to hold accountable financial institutions that elected to ignore the rules and to pursue their own financial interests at the expense of hardworking Americans."
MetLife Bank merged with MetLife Home Loans in 2013. It is a wholly owned subsidiary of New York-based MetLife, Inc.
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