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U.S. Bank Agrees to Pay $1.2M in HUD Settlement

Under the terms of a settlement reached with ""HUD"":http://www.hud.gov late last week, Minneapolis-based ""U.S. Bank"":http://www.usbank.com will pay $1.2 million to resolve allegations that it failed to comply with Federal Housing Administration (FHA) requirements in connection with 27 mortgage loans. U.S. Bank is the FHA's eighth largest mortgage lender.

U.S. Bank did not admit any liability, but HUD documented losses of more than $465,000 in relation to these loans.

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""FHA's underwriting and endorsement standards exist to protect its insurance fund and every family hoping to sustain homeownership,"" said Helen Kanovsky, HUD general counsel. ""We expect our lenders to uphold those standards, and we will hold them accountable when they don't.""

A 2006 audit by HUD's Office of Inspector General concluded that U.S. Bank failed to meet FHA underwriting standards in connection with mortgage loans originated in 2003 and 2004.

FHA generally prohibits the inclusion of overdue principal, interest, and late charges in refinanced loans, but the audit found that, in some cases, U.S. Bank refinanced loans that included such prohibited amounts among other violations of FHA underwriting requirements.

U.S. Bank also submitted loans in default to HUD for late endorsement. FHA requires that loans not be in default when they are submitted for late endorsement, or more than 60 days after closing.

HUD's Office of Program Enforcement referred the case to the U.S. Attorney's Office for the District of Minnesota, which settled the case.

About Author: Heather Cernoch

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