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Justice News

Department of Justice
U.S. Attorney’s Office
Southern District of California

Thursday, October 22, 2020

Guild Mortgage Company of San Diego to Pay Almost $25 Million to Resolve Allegations it Knowingly Caused False Claims

Assistant U. S. Attorney Joseph Price (619) 546-7642

NEWS RELEASE SUMMARY – October 22, 2020

SAN DIEGO – Guild Mortgage Company has agreed to pay the United States $24.9 million to resolve allegations that it violated the False Claims Act and the common law by knowingly breaching material program requirements when it originated and underwrote mortgages insured by the Department of Housing and Urban Development’s (HUD) Federal Housing Administration (FHA), the Department of Justice announced today. Guild Mortgage Company is headquartered in San Diego, California, with branches across the United States.

“Ensuring the integrity of federal lending programs is important to keeping those programs financially sound,” said Acting Assistant Attorney General Jeffrey Bossert Clark of the Department of Justice’s Civil Division.  “Together, with our partners at HUD, we have worked hard to hold accountable FHA lenders that knowingly and materially violate program requirements that help Americans achieve the dream of home ownership.”

“As this settlement demonstrates, we are committed to holding mortgage lenders accountable when they choose to abuse the integrity of vital government programs that are designed to assist homeownership,” said U.S. Attorney Robert Brewer.  “We also commend the whistleblower for coming forward, exposing these wrongs, and working with the government investigative team.”

“The United States is committed to providing Americans opportunities to own their own homes,” said Acting U.S. Attorney for the District of Columbia Michael R. Sherwin.  “This settlement reflects the diligent work of officials from the Department of Justice and HUD to ensure that the programs that provide those opportunities are operated with integrity and in accordance with requirements established by law.”

“The Federal Housing Administration insurance program is a critical tool that helps hardworking Americans achieve their dream of homeownership.  Any abuse of that program is unacceptable and the bad actors will be held accountable,” said Rae Oliver Davis, U.S. Department of Housing and Urban Development, Inspector General.  “This case highlights the effectiveness and the importance of whistleblower programs.” 

Participants in the FHA mortgage insurance program, like Guild Mortgage Company, can originate and underwrite mortgages without first having the government review the loans for compliance with the agency’s underwriting and origination requirements.  If an FHA-insured loan defaults, the holder of the loan can then recover from the United States for certain losses.  Lenders must follow FHA rules designed to ensure that only mortgages that meet key credit and underwriting criteria are insured by the government. 

The settlement announced today resolves allegations that Guild Mortgage Company knowingly approved ineligible loans that later defaulted and resulted in claims to FHA for mortgage insurance, failed to comply with material program rules that require lenders to maintain quality control programs to prevent and correct underwriting deficiencies, and failed to self-report materially deficient loans that it identified.

The agreement resolves allegations brought by the former head of quality control at Guild Mortgage Company, Kevin Dougherty, under the qui tam, or whistleblower, provisions of the False Claims Act, which permit private parties to sue on behalf of the government for false claims and to receive a share of any recovery.  The Act permits the United States to intervene in such a lawsuit, as it did in part here.  Dougherty will receive $4,980,000 as his share of the government’s recovery.

The investigation, litigation, and settlement were the result of a coordinated effort among the Commercial Litigation Branch of the Department of Justice’s Civil Division, the U.S. Attorney’s Offices for the District of Columbia and the Southern District of California, HUD, and HUD-OIG. 

The qui tam case is captioned United States ex rel. Dougherty v. Guild Mortgage Company, Civ. A. No. 16-2909 (S.D. Cal.). 

The claims asserted against the defendant are allegations only, and there has been no determination of liability.



False Claims Act
Press Release Number: 
Updated October 22, 2020