Alleged false claims made on government-insured mortgages will cost a company out of Michigan more than $4 million.
GTL Investments Inc. is licensed to do business in Illinois and in Michigan, where it maintains its headquarters in Southfield.
The mortgage firm originally opened for business in 1971. Nationwide Mortgage Licensing System data indicate that it currently sponsors 30 originators.
It also does business as Ann Arbor Mortgage Companies, Front Street Mortgage, John Adams Mortgage Co. and LendingStar Group Inc.
Ann Arbor Mortgage
reports that it has closed in excess of 5,000 loans for more than $800 million — most of which was originated by its president and co-founder, Bill Holmes.
On its website, John Adams Mortgage says it offers conventional mortgages, loans guaranteed by the Department of Veterans Affairs and mortgages insured by the Federal Housing Administration.
But some of the FHA loans it originated had material underwriting deficiencies, a statement from the U.S. Attorney’s Office for the Eastern District of Michigan indicated.
“The original lender or loan originator is responsible for making sure that the borrower meets these underwriting standards to minimize the possibility of default and the need for the FHA to pay the mortgage holder for the losses caused by the default,” the Justice Department said.
According to the announcement, an
investigation by the Office of Inspector General for the Department of Housing and Urban Development uncovered 31 FHA mortgages originated by John Adams Mortgage with material underwriting deficiencies. The loans were originated between January 2008 and April 2012.
Of those loans, 29 had FHA claims made — costing the agency $2,445,912. Potential losses on the other two loans are anticipated to be $250,000.
The claims were made in violation of the False Claims Act.
GTL has agreed to pay $4.2 million to resolve the False Claims Act violations.
In addition, it has agreed to indemnify FHA on potential losses from the two loans that have not yet had claims made on them.
“By holding accountable lenders who fail to comply with underwriting requirements, we hope to send a message to all lenders that they must comply with government standards for federally insured loans,” U.S. Attorney Barbara L. McQuade stated in the announcement.
