The Office of Inspector General (OIG) assisted the U.S. Attorney’s Office for the District of New Jersey in the investigation of Finance of America Mortgage LLC. The investigation began due to a qui tam filing in the U.S. District Court for the District of New Jersey. The relator alleged that Finance of America, through its acquisition of Gateway Funding Diversified Mortgage Services LLP, knowingly participated in a mortgage fraud scheme involving the origination and underwriting of loans for manufactured homes. Finance of America’s principal place of business is in Horsham, PA. Gateway Funding was a lender approved by HUD through the direct endorsement loan program. This program granted Gateway Funding the authority to originate and underwrite FHA-insured loans without prior approval from HUD. Finance of America purchased Gateway Funding in April 2015.
Our investigation found that the relator’s allegation regarding Finance of America was unsubstantiated. However, the relator’s loan on her manufactured home did not qualify for FHA insurance. Therefore, the loan was ineligible for FHA insurance, and HUD should not suffer losses as a result. We recommended that HUD take appropriate action to prevent an insurance claim. HUD’s National Servicing Center placed a permanent block on the relator’s loan on April 21, 2016, which prevents FHA from paying a claim and preventing the loss of $55,405, thereby putting these funds to better use.