National City to Pay $4.6 Million Settlement

National City Mortgage has agreed to pay $4.6 million to settle claims by the U.S. Department of Justice that it submitted mortgages to the Federal Housing Administration for mortgage insurance that were already in default. The Miamisburg, Ohio, lender allegedly submitted 58 loans for FHA endorsement where the borrowers had already missed a payment. FHA requires lenders that submit mortgages 60 days after origination to certify that the payments are current. "Lenders must follow the Department of Housing and Urban Development's rules and be held accountable if they knowingly submit loans that are not eligible for insurance," acting assistant attorney general Gregory Katsas said. National City Mortgage is one of the largest FHA lenders and it has "a long history as a responsible lender," a spokesman said. "As stated in the settlement agreement, National City refuted the government's allegations and denied any liability." The HUD Inspector General referred the National City case to the Justice Department. In 2006, IG auditors found that NCM had originated 34,838 FHA mortgages between Feb. 1, 2004 and Aug. 31, 2005 and 1,476 of those loans were in default within the first six payments.