A former underwriter for a mortgage lending company has been awarded $9 million as a whistleblower for her part in a federal investigation of the lender, the U.S. Justice Department announced Tuesday.
Mary Bozzelli, underwriter for PHH Corp., a Mount Laurel, N.J.-based mortgage lending company, raised concerns about the lending practices of the company, which subsequently resulted in a U.S. Department of Justice investigation.
The investigation led to PHH Corp. agreeing to pay $74 million to the U.S. government. Bozzelli will receive $9 million of the settlement, which resolves claims that the company approved mortgages for unqualified borrowers. The loan practices cost borrrowers and the U.S. government substantial amounts of money, the Justice Department said.
The settlement arose from charges that PHH Mortgage Corp. and PHH Home Loans approved mortgages that did not meet the standards of government programs that were insuring the loans, such as the Department of Housing and Urban Development and the Veterans Administration.
“Government mortgage programs designed to assist homeowners — including programs offered by the FHA, VA, Fannie Mae and Freddie Mac — depend on lenders to approve only eligible loans,” said Acting Assistant Attorney General Chad A. Readler when the settlement was announced.
PHH admitted that it approved loans between 2006 and 2011 without documenting the borrowers’ credit worthiness and approved loans for borrowers who did not meet HUD’s minimum requirements for a loan, the Justice Department said.
PHH acknowledged the loans to unqualified borrowers caused HUD substantial losses when the department had to pay insurance claims on those loans, the Justice Department said.
Bozzelli was put under a great deal of pressure from the company to approve the nonqualified loans, says one of her attorneys, Jonathan Ferris of Thomas and Solomon, employment attorneys in Rochester, N.Y.