M & T Bank (MTB) will pay the U.S. government $64M to resolve a lawsuit about housing loans. The case stems from a whistleblower case filed by an ex-M & T underwriter accusing the bank of underwriting fraud. Following its investigation, the Department of Justice said that M & T had awarded loans that failed to meet certain Federal Housing Administration (FHA) requirements. <\/p>\n
As part of the deal reached, M & T Bank admitted that between 1\/07 and 12\/11, it certified mortgage loans that were insured by the FHA even though they did not satisfy the Department of Housing and Urban Development\u2019s (HUD) underwriting requirements and failed to adhere to the federal government\u2019s quality control requirements. M & T Bank also admitted that before 2010, it did not preview every Early Payment Default loan, which are loan that become 60 days past due during the first six months of repayment, nor did it review an adequate FHA loan sample between \u201906 and \u201911 even though this was an HUD requirement.<\/p>\n
M & T also established a quality control process that let it generate preliminary major errors that were much lower than what that rate would have been if the preliminary major error rate were determined more appropriately. The bank did not abide by HUD\u2019s self-reporting requirements even after identifying that a number of FHA insured loans had these \u201cmajor errors.\u201d It wasn\u2019t until 2008 that it began to self-report loans with errors.<\/p>\n