BB&T will pay $83 million to settle Department of Justice allegations the Winston-Salem bank knowingly originated and underwrote federally insured mortgage loans that failed to meet federal requirements.
The third-largest bank by deposits in the Charlotte region exposed taxpayers to “substantial losses” by falsely certifying Federal Housing Administration loans met federal quality control and underwriting requirements, the Justice Department said Thursday. The Justice Department said the certifications ran from Jan. 1, 2006, to Sept. 30, 2014.
“This settlement recovers substantial losses caused by BB&T’s decision to place its own profits above its commitment to adhere to underwriting and quality control requirements,” Benjamin Mizer, head of the Justice Department’s Civil Division, said in a statement.
In its own statement, BB&T said it settled the matter without any admission of liability to avoid the cost and uncertainty of potential litigation. The bank also said it had previously publicly disclosed the investigation.
The Justice Department said BB&T profited from its False Claims Act violations, noting for example the bank increased its number of FHA insured loans sixfold between 2006 and 2009.
During the rise in loan volume, BB&T also had an increase in the number of loans it internally gave a “serious marketability” defect rating, which rendered loans ineligible for FHA insurance, the Justice Department said.
As a result of BB&T’s conduct, HUD subsequently incurred substantial losses when it paid insurance claims on loans that defaulted, the Justice Department said.