CHICAGO — Chicago-based lender Guaranteed Rate has agreed to pay the government $15 million to settle a federal whistleblower lawsuit alleging it knowingly made false claims to get government insurance for home loan mortgages.
Guaranteed Rate and other lenders participating in insurance programs with the Federal Housing Administration and Department of Veterans Affairs can underwrite mortgage loans without first getting government approval. If the borrower of an FHA- or VA-backed loan defaults, the government is on the hook for the losses.
The 2017 lawsuit filed in a New York federal court by a former employee alleged Guaranteed Rate pushed its underwriters into endorsing ineligible loans and making false statements to “induce the government” to extend insurance coverage.
“Today’s settlement holds Guaranteed Rate accountable for its past violations and reflects that it has strengthened its internal controls to ensure future compliance with Federal Housing Administration and Department of Veterans Affairs requirements,” Grant Jaquith, U.S. attorney for the Northern District of New York, said in a news release Wednesday announcing the settlement.
The $15 million civil settlement includes more than $2.4 million for whistleblower Anthonitte Carranza, who worked as an underwriter for Guaranteed Rate from 2012 to 2013, and again from 2015 to 2016.
Carranza alleged in the lawsuit she was fired during her second tenure after raising concerns with Guaranteed Rate’s management that the company was “engaging in fraud and submitting false claims” to the government.
As part of the settlement, Guaranteed Rate admitted that it failed to adhere to self-reporting requirements and certified loans for government insurance that were not eligible. It also admitted to giving FHA underwriters commissions and gifts in violation of the rules.
“The DOJ (Department of Justice) helped us identify some issues that had already been corrected or were immediately corrected once identified,” Guaranteed Rate said in an emailed statement Wednesday. “We never intentionally violated any guidelines, that’s just not who we are.”
The Justice Department said Guaranteed Rate “received credit” for taking “significant measures” to stop the practices, both before and after being notified of the federal investigation.
Founded in 2000 by Victor Ciardelli, Guaranteed Rate is one of the largest retail mortgage lenders in the country, funding more than $30 billion in loans last year, according to the company. Guaranteed Rate has more than 4,000 employees nationwide.
In 2016, the company struck a 13-year naming rights agreement with the White Sox, changing the name of the team’s South Side ballpark from U.S. Cellular Field to Guaranteed Rate Field.
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