HUD Secretary Ben Carson told lawmakers that overly rigid False Claims Act enforcement had forced lenders to suffer financially for what were just minor errors, but that lenders' fears of being sued were dissipating.
Trump officials have made clear their intent to reexamine how Federal Housing Administration lenders are cited under the False Claims Act, but whether that means lenders can rest easier is an open question.
The HUD secretary’s comment that such use of the False Claims Act was “ridiculous” may delight the mortgage industry but does not bode well for taxpayers or the federal government’s future fraud enforcement efforts.
Critics of recent False Claims Act enforcement argue the Justice Department is too heavy-handed toward lenders and servicers. But in an industry reputed for shoddy processes during the crisis, perhaps stringent oversight is warranted.