The United States Sues Reunion Mortgage and its Owner, President, and Designated Broker under the False Claims Act
SAN FRANCISCO – The United States filed a civil complaint against Reunion Mortgage and its Owner, President and Designated Broker, David Thayer, under the False Claims Act, 31 U.S.C. §§ 3729-3733, United States Attorney Melinda Haag announced. The complaint seeks treble damages and civil penalties in connection with Reunion Mortgage’s participation in the Federal Housing Administration’s (“FHA”) Direct Endorsement Lender Program.
The complaint alleges that Reunion Mortgage and Thayer approved twelve loans and falsely certified that the loans met the U.S. Housing and Urban Development’s (“HUD”) requirements and were eligible for FHA insurance. The complaint further alleges that Reunion Mortgage and Thayer 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. The twelve loans defaulted and FHA paid more than $1.63 million in insurance claims as a result.
U.S. Attorney Melinda Haag said: “As alleged, Reunion Mortgage and David Thayer turned out bad loans and lied about their compliance with HUD requirements. This Office will continue its work to hold the perpetrators of mortgage fraud accountable.”
Ila C. Deiss is the Assistant U.S. Attorney who is handling the case with the assistance of Financial Fraud Investigator Michael Zehr, Contract Paralegal Sarah Oldridge, and HUD Forensic Auditor Seda Mangassarian. 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.