The Department of Housing and Urban Development reached settlements with Bank of America and mortgage banking firm James B. Nutter & Co. over allegations that the lenders failed to perform due diligence in underwriting Home Equity Conversion Mortgage loans.

Both Bank of America and James B. Nutter & Co. allowed borrowers to take out more than one HECM loan in violation of program requirements, according to March 27 announcements from the HUD Office of Inspector General. The HECM program provides older homeowners with government-insured reverse mortgages in order to help them tap into home equity as a source of monthly income or credit. Borrowers can only take out loans for their principal residence and may not have more than one principal residence at a time.

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