Mortgage underwriting fraud has helped push the government’s whistleblower recoveries to several billion dollars in 2016.

Whistleblowers were awarded a total of just over half a billion.

The 2008 financial crisis led to a resurgence in mortgage underwriting fraud cases, and though these cases have slowed down in more recent years, underwriting fraud is still an ongoing problem in the mortgage industry.

Just this last April, Freedom Mortgage Corporation paid around $113 million in a False Claims Act case.

According to prosecutors, Freedom Mortgage had “failed to comply with certain FHA origination, underwriting and quality control requirements.”

Shortly after the Freedom Mortgage case ended, M&T Bank settled another False Claims Act case with the Department of Justice for $64 million.

Prosecutors said that the bank committed mortgage underwriting fraud, issuing FHA-insured loans that failed to meet federal requirements.

Smaller mortgage underwriting fraud settlements have been reached, including the $5 million Primary Residential Mortgage settlement and the $4.25 million SecurityNational Mortgage Company settlement.

Both of these settlements were mortgage underwriting fraud cases brought under the False Claims Act.

In another case, Allied Home Mortgage was found to have violated the False Claims Act. While the jury issued a verdict against Allied for $92 million, this is simply the losses the government has been determined to suffer, and does not represent the total amount that Allied may soon owe.

Indeed, the court may triple that figure to consider both the award and assesses penalties in a forthcoming decision.

This Allied case is closely linked to another case, since the Department of Justice also prosecuted Allied’s CEO separately. The jury determined that the former CEO should pay $7 million, but the court is likely to triple that amount again.

Filing a Whistleblower Lawsuit

The False Claims Act, the most common law referenced in cases of underwriting fraud, is a longstanding law in the United States. Originally passed during the civil war, the False Claims Act continues to be the Justice Department’s main weapon against fraud, including underwriting fraud.

The government often relies on the help of whistleblowers to report and expose fraud, including mortgage underwriting fraud. Whistleblowers are usually employees or former employees of companies.

A whistleblower’s role is very important, as they call attention to fraud on behalf of the government. While it can be intimidating for an employee to blow the whistle on a current employer, there are laws in place to protect whistleblowers from these kinds of discriminatory actions. The government wants to protect whistleblowers that expose fraudulent activity.

The False Claims Act has a huge benefit for whistleblowers. Whistleblowers are often paid between 15 and 30 percent of the government’s recovery amount through the lawsuit, leading to generally large cash rewards. The False Claims Act also protects whistleblowers from retaliation by their companies.

If you believe that your current or former employer is participating or has participated in underwriting fraud or other fraudulent behavior against the government, you may be able to become a whistleblower and call attention to this problem on behalf of the federal government.