FOR IMMEDIATE RELEASE                                         CIV
FRIDAY, MARCH 31, 1995                             (202) 514-2008
                                               TDD (202) 514-1888


                    FIRST UNION MORTGAGE CORP
                TO PAY U.S. $6.3 MILLION IN CLAIMS

                                        
     WASHINGTON, D.C.-- The Department of Justice announced today
that it has agreed to accept $6.3 million from First Union
Mortgage Corporation (FUMC), of Charlotte, North Carolina, in
settlement of claims concerning FUMC's improper origination of
home mortgage loans guaranteed by the Department of Veterans
Affairs (VA).  
     Assistant Attorney General Frank W. Hunger, head of the
Civil Division, said that "the settlement should send a strong
message to banks and mortgage companies that they will be held
strictly accountable for any improprieties in funding government
guaranteed loans."  
     Stephen A. Trodden, the VA Inspector General, stated that
his "office will continue to place the highest priority on
uncovering schemes which erode the taxpayer's confidence in
programs established to aid our deserving veterans."
     The loan origination problems occurred between September
1984 and March 1986 in Colorado Springs, Colorado, and between
March 1987 and May 1989 in Atlantic Beach, Florida.  FUMC
employees recorded false information regarding borrowers on
applications and related forms necessary to obtain loans
guaranteed by the VA.  
     Critical credit information concerning such matters as the
borrowers' income, debts, and number of dependents was
misrepresented.  Numerous loans went into default as a result of
these false statements, causing the VA to lose several million
dollars under its loan guarantee program.
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95-182