The U.S. Department of Housing and Urban Development (HUD), Office of Inspector General (OIG), reviewed preforeclosure sales under the Federal Housing Administration (FHA) program in the St. Louis, MO, area. We found that the purchaser of a property being sold in a preforeclosure sale entered into a consulting agreement with the realtor. The agreement required that when the purchaser later sold the property, he would pay half of the net proceeds from that sale to the realtor’s consulting company.
On December 17, 2015, HUD served a complaint on the purchaser seeking a penalty and an assessment under the Program Fraud Civil Remedies Act. The complaint alleged that he caused the submission of a false claim to HUD and made multiple false statements in the arm’s-length affidavit.
HUD and the purchaser entered into a settlement as both parties mutually desired to avoid further expense and litigation and to reach a satisfactory resolution of this matter. The settlement agreement did not constitute an admission of liability or fault on the part of any party and was voluntary and entered into by the purchaser after due consideration of the terms of the agreement. The purchaser agreed to pay HUD $5,000.