Nelson Thomas, Michael Lingle, Jonathan Ferris of Thomas & Solomon LLP
A major settlement was announced involving a high-profile mortgage lender and the United States government on August 8, 2017. PHH Mortgage Corporation (PHH) has agreed to pay $74 million to the federal government to settle claims that its loans were insured by the U.S. Department of Housing and Urban Development’s (HUD) Federal Housing Administration (FHA) and the Department of Veteran Affairs (VA). The settlement also covers loans sold by PHH to Fannie Mae and Freddie Mac that failed to meet the required underwriting regulations.
The whistleblower, Mary Bozzelli, was a former underwriter and underwriting supervisor for PHH from 1992 to 2011 and filed the suit in 2013. She was represented by Nelson Thomas, Michael Lingle, and Jonathan Ferris of Thomas & Solomon LLP in Rochester, New York.
“Mary is a great example of someone who was willing to step forward and do the right thing,” said Thomas. “Today shows that there are indeed individuals can make a big impact on stopping corporate fraud. The reward that she is receiving is completely appropriate given that she has saved the taxpayers tens of millions of dollars.”
Portions of the settlement resulted from a lawsuit filed under the qui tam whistleblower provisions of the False Claims Act. As part of the settlement agreements, the United States is awarding Bozzelli more than $9 million for the role she played in blowing the whistle on PHH’s mortgage fraud.
“It is great to see PHH finally held accountable for its actions,” said Bozzelli in a statement. “Mortgage fraud is hardly victim-less Not only did PHH defraud taxpayers, but instead of helping deserving borrowers obtain home loans through the government loan programs, I witnessed firsthand the ways in which PHH abused the programs to line its own pockets.”
The qui tam action was United States ex rel. Mary Bozzelli v. PHH Mortgage Corporation and PHH Corporation, 13-cv-3084 (E.D.N.Y.).