Lafayette-based IberiaBank has agreed to pay $11.69 million to the federal government after admitting that it submitted false claims for federal loan guarantees on mortgages between 2005 and 2014.
The U.S. Justice Department announced the settlement on Friday, which stems from a federal whistleblower lawsuit filed by two former employees.
IberiaBank officials admit that over the nine-year period it paid loan underwriters commission, which is prohibited, and that ineligible mortgage loans were certified that did not meet Federal Housing Administration standards.
The Federal Housing Administration is a division of the U.S. Department of Housing and Urban Development. IberiaBank was as a direct endorsement lender in the FHA’s insurance program, the DOJ says. As such, the bank had the authority to originate, underwrite and endorse mortgages for FHA insurance.
HUD did pay insurance claims on some of the mortgages claims submitted by IberiaBank, including ones where the bank’s files contained inadequate documentation of the borrower’s income, unresolved appraisal discrepancies on declining home values and inadequate verification of the borrower’s down payment.
“It is troubling when financial institutions, who have fiduciary responsibilities and are expected to conduct themselves as honest brokers, wrongfully exploit federally funded programs,” says Jeremy Kirkland, HUD’s acting deputy inspector general.
