News and Press Releases

Reunion Mortgage, Inc. To Pay $1.04 Million To Resolve Allegations Of Defrauding The Federal Housing Administration Program

FOR IMMEDIATE RELEASE
May 16, 2014

SAN FRANCISCO – United States Attorney Melinda Haag announced today that Reunion Mortgage, Inc. and its former co-owners have agreed to pay $1.04 million to settle allegations that the company submitted false claims to the Federal Housing Administration (“FHA”) in violation of the False Claims Act, 31 U.S.C. §§ 3729-33.

The United States alleged that Reunion Mortgage falsely certified that certain loans met the U.S. Housing and Urban Development’s (“HUD”) requirements and were eligible for FHA insurance. The complaint further alleged that Reunion Mortgage knew that the company’s underwriters routinely failed to perform basic due diligence, failed to verify information in the loan file that bore directly on the borrower’s ability to make payments on the mortgage, and repeatedly certified mortgage loans that contained serious defects and departures from HUD’s underwriting standards. Reunion Mortgage, now out of business, was formerly located in Milpitas. The United States also alleged that Reunion Mortgage improperly issued a dividend to co-owners David Thayer and R. Kent Harvey that rendered the company insolvent and unable to pay its debts to the United States, in violation of the Federal Debt Collections Procedures Act.

“This Office is committed to holding lenders accountable for fraudulent and reckless underwriting of federally insured FHA home loans. The systematic abuse of the system will not be tolerated,” said United States Attorney Melinda Haag.

Ila C. Deiss is the Assistant U.S. Attorney who handled the case with the assistance of Michael Zehr, Tina Louie, and Sarah Oldridge. The case is the result of an investigation by HUD’s Office of the Inspector General’s Civil Fraud Division, and is part of HUD's High Default Lender Initiative.

 

 

Return to Top

United States Attorneys 225th Anniversary
USAO Homepage
USAO Briefing Room
Stay Connected with Twitter
Justice 101
Northern California Most Wanted
Investor Fraud Summit

Bay Area Prescription Drug Abuse Summit
May 7, 2014

Investor Fraud Summit

Investor Fraud Summit
October 9, 2012

Bay Area Stop Bullying Summit

September 14, 2012

Victim Witness Assistance

Making sure that victims of federal crimes are treated with compassion, fairness and respect.

Financial Fraud Enforcement Task Force

Financial Fraud Enforcement Task Force

Community Outreach

Giving Back to the Community through a variety of venues & initiatives.

Law Enforcement Coordinating Committee

Training and seminars for Federal, State, and Local Law Enforcement Agencies.