BB&T to Pay $83 Million to Settle FHA-Loan Case
September 29 2016 - 7:00PM
Dow Jones News
BB&T Corp. has reached an $83 million settlement with the
U.S. Justice Department over issues with loans backed by the
Federal Housing Administration.
The bank said it settled the inquiry without any admission of
liability to avoid the cost and uncertainty of potential
litigation.
BB&T on Thursday said that because of its previous $85
million of accruals, the settlement won't affect its financial
results. BB&T also is "pursuing a potential recovery" of about
$70 million for "a related matter."
The Justice Department alleged that BB&T violated the False
Claims Act by originating and underwriting loans that didn't meet
applicable requirements. The agency said BB&T "admitted to the
following facts" that it listed concerning loan-quality issues.
SunTrust Banks Inc., J.P. Morgan Chase & Co. and Wells Fargo
& Co. are among the banks that have reached FHA-related
settlements.
Because banks must certify that FHA-backed mortgages they
originate have no errors, when mistakes are found, the Justice
Department sometimes has pursued damages under the False Claims
Act.
Some banks, believing the penalties are too harsh relative to
the errors made, have pulled back from originating FHA-backed
mortgages and argued that the broad "certification" they must make
when originating a mortgage should be limited to significant
errors.
Write to Josh Beckerman at josh.beckerman@wsj.com
(END) Dow Jones Newswires
September 29, 2016 18:45 ET (22:45 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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