NEW YORK (AP) — MetLife’s home lending unit will pay $123.5 million to end an investigation into allegations it gave government-backed mortgages to people who didn’t meet federal requirements.
The Justice Department said Wednesday that MetLife knew the business was issuing hundreds of loans that didn’t meet federal requirements, which means they were not eligible for insurance by the Federal Housing Authority. But MetLife granted the mortgages anyway, and the agency says the FHA and taxpayers were stuck with the bill when defaults followed.
According to the agency, during some periods between January 2009 and August 2010 MetLife Bank knew that a majority of the loans it was originating had material or significant deficiencies. While those rates improved later, it says MetLife also altered its practices so fewer mortgages appeared to be deficient.
The Justice Department says MetLife Bank’s CEO, board of directors, and other members of senior management were aware that many of the mortgages didn’t meet government standards.
The New York company says it cooperated with the investigation and set aside money for the settlement. It exited the business in 2012.
MetLife Bank was also among 16 major mortgage lenders and servicers cited by U.S. regulators in April 2011 for improperly foreclosing upon homeowners in 2009 and 2010. The Federal Reserve imposed $3.2 million in penalties against MetLife.
Shares of MetLife Inc. fell 9 cents to $51.30 in afternoon trading.