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ABA: The American Bankers Association
Compliance News

HUD, DOJ Clarify Procedures for Handling False Claims Act Violations

In a significant move that could encourage more banks to engage in Federal Housing Administration lending, the Department of Justice and the Department of Housing and Urban Development announced that they have signed a memorandum of understanding on how they will address potential violations under the False Claims Act (FCA). The MOU states that violations will be primarily addressed through HUD administrative proceedings and only referred to DOJ under certain circumstances.

The agencies issued the MOU to address growing concerns about FCA liability that have led to many well-capitalized lenders exiting the FHA market in recent years. According to HUD, depository institutions accounted for less than 15% of FHA originations in 2018, down from 45% in 2010.

ABA—which has long called on HUD to clarify FHA program guidelines to foster greater bank participation—welcomed this action from the agencies. The association is currently reviewing the details of the agreement and will review any forthcoming regulations as they are issued. For more information, contact ABA's Rod Alba or Sharon Whitaker.