Mortgage lender PHH agrees to pay $74 million settlement

Markets Associated Press

Federal prosecutors in Minnesota say PHH Corp. and two subsidiaries have agreed to pay over $74 million to settle allegations they violated standards for underwriting government-backed mortgages.

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Acting U.S. Attorney for Minnesota Gregory Brooker said in a statement Tuesday that Mount Laurel, New Jersey-based PHH submitted defective loans for government insurance, and that homeowners and taxpayers paid the price.

The settlement includes $65 million for alleged violations involving loans insured by the Federal Housing Administration, and nearly $9.5 million for loans guaranteed by the Department of Veterans Affairs. The government says it incurred "substantial losses" in paying insurance claims on the FHA loans. About $9 million will go to a whistleblower who formerly worked for PHH.

PHH says it settled without admitting liability to avoid the distraction and expense of litigation.