JPMorgan admits to submitting phony mortgage claims

February 05, 2014 04:50PM

JPMorgan Chase agreed to pay $614 million in fines after confessing to wrongfully filing Federal Housing Administration and Department of Veterans Affairs mortgages, the bank announced today.

The bank was in violation of the False Claims Act, in that it purposely originated and underwrote non-compliant loans that received insurance coverage. When internal reviews found more than 500 defective loans that were not supposed to be qualified to be submitted for insurance, the bank also did not notify the FHFA.

A lawsuit filed in August by Florida-based attorney and fraud expert Lynn Szymoniak alleged widespread creation and use of fraudulent mortgage documents, which reduced the value of mortgage backed securities purchased by the city and state. Other banks cited in the suit were Chase Home Finance, Ally Financial, CitiMortgage, Wells Fargo Home Mortgage and Bank of America Mortgage Securities, as previously reported. [Housing Wire]Mark Maurer