Allied Home Mortgage Corp. was ordered to pay $296 million after a jury found the Texas lender violated the False Claims Act by defrauding the Federal Housing Administration insurance program for over a decade.

Jim Hodge, president and CEO of Houston-based Allied, was also ordered to pay $25.3 million.

Allied engaged in a "decade of fraudulent misconduct while participating in the Federal Housing Administration mortgage insurance program," Joon Kim, Acting U.S. Attorney for the Southern District of New York, said in a press release.

"Jim Hodge and Allied defrauded a federal mortgage insurance program designed to help spread the dream of homeownership, and then lied about it repeatedly. A jury saw through their lies, and now the court has imposed millions of dollars in additional penalties," according to the press release.

Allied could not be reached for comment as the company's main phone number "is not in service," according to a recording.

A jury found that Allied and Hodge violated the False Claims Act and caused over $92 million in damages to the FHA mortgage insurance fund. The False Claims Act allows courts to impose treble damages.

PHH Corp. settled a False Claims Act investigation in August by the Justice Department and agreed to pay a $75 million settlement for its underwriting practices on FHA-insured mortgages as wells as Department of Veterans Affairs-insured mortgages and loans sold to Fannie Mae and Freddie Mac.

In addition, the Department of Justice has shown a recent interest in reverse mortgages and servicers of FHA-insured Home Equity Conversion Mortgages.

Financial Freedom, a subsidiary of OneWest Bank, agreed to pay $89 million in May to settle False Claims Act allegations involving unearned interest payments it received from the Federal Housing Administration.

The Department of Justice alleged that Financial Freedom failed to meet FHA deadlines regarding property appraisal, claim submission and pursuit of foreclosure proceedings and should not have received the interest payments.

"HECM servicers must be held accountable for failing to adhere to FHA requirements that are designed to ensure the continued viability of the HECM program. We are pleased that Financial Freedom agreed to accept financial responsibility for these failures," said Stephen Muldrow, Acting U.S. Attorney for the Middle District of Florida, in a press release.

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