HUD and DOJ signal easing of FCA enforcement in FHA residential mortgage lending through interagency memorandum

On October 28, 2019 the U.S. Department of Housing and Urban Development (HUD) and the U.S. Department of Justice (DOJ) released a (MOU) announcing their joint approach to False Claims Act (FCA) enforcement against Federal Housing Administration (FHA) mortgage lenders.

The MOU recognizes that stiff FCA penalties and FCA scrutiny for "unintentional mistakes and honest errors" could be linked to falling participation – at least among depository institutions – in the FHA-guaranteed loan market. The MOU reflects an intent to raise the bar for initiating FCA enforcement proceedings.; Instead, in the first instance, allegations of regulatory non-compliance would be resolved through HUD administrative proceedings.

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