FIAFEA Mortgage Declarations: The New Fact Behind the Whistleblower Award

A whistleblower’s FIAFEA mortgage declaration presents sworn facts about a qualifying fraud affecting a federally insured depository institution. It must supply a necessary fact the government did not know when the declaration was filed. If you know what a loan file or servicing claim left out, we examine that fact, the transaction and the possible recovery together.

What Is a FIAFEA Mortgage Declaration?

A FIAFEA mortgage declaration is a confidential declaration under the Financial Institutions Anti-Fraud Enforcement Act. The declaration law connects it to qualifying civil enforcement under FIRREA, the Financial Institutions Reform, Recovery, and Enforcement Act. FIRREA supplies the government’s civil enforcement authority. FIAFEA supplies the separate declaration and award process.

That separation matters in a mortgage business. FIRREA can reach conduct involving some private mortgage companies, while FIAFEA has its own requirement that the violation affect a federally insured depository institution. We examine the institution affected and the transaction connecting it to the alleged fraud, alongside the loan’s insurance and payment history.

A False Claims Act case follows a different route, centered on a qualifying false claim or obligation involving government money. A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers. FIAFEA pays on its own scale, and the Attorney General decides whether to act.

Which Mortgage Facts Matter to a FIAFEA Declaration?

A FIAFEA declaration needs specific facts about particular transactions, the basis for the whistleblower’s knowledge, supporting facts, witnesses and the nature and location of documentary evidence. For a mortgage insider, that makes the connection between what happened inside the business and what the business represented outside it central to our review.

In an underwriting matter, the useful sequence can run from the original loan information through the reviewer, the person authorized to clear an exception, the certification and the paid insurance claim. Quality-control findings and the management recipients help establish who knew about the discrepancy. We examine the file as it existed when the representation was made, including the decisions that allowed the loan to move forward.

Servicing evidence follows a different sequence. The important fact may concern a missed milestone, an approved extension, an expense or the version of a claim sent for payment. In a reverse-mortgage interest case, the disputed payment can be excess interest rather than the whole loan balance. The servicing history explains the interest request in a way the original application cannot.

The company that originated the loan, the company servicing it and the party holding the supporting documents can differ. A subservicer may hold the operational history while another entity submits the claim or receives the payment. We connect the record holder, the representation and the recipient of the money so that the new fact has a place in an identifiable mortgage transaction.

Are FIAFEA Mortgage Declarations Anonymous?

A FIAFEA mortgage declaration is not anonymous to the government: the law requires the whistleblower’s name and address. Confidentiality does not remove that identification requirement. We address questions about anonymity and FIAFEA confidentiality with you and mortgage fraud whistleblower counsel before a report. Your role in the events, how the information reached you and any earlier public disclosure belong in that same conversation. Our review connects those personal questions with the transaction evidence and the declaration’s eligibility requirements.

How Much Can a FIAFEA Mortgage Whistleblower Receive?

A civil FIAFEA award uses different percentages for successive portions of a qualifying recovery. The law ties the award to funds or assets the United States acquires through a judgment, order or settlement, and to the Attorney General’s determination that a valid declaration contributed to that result. Those are the connections we examine before discussing what a settlement could mean for a particular whistleblower.

The civil award provisions let the Attorney General consider the overall recovery and the usefulness of the information. When several declarants contribute to the recovery, the total award is calculated first and then divided according to their contributions.

Financial Freedom’s Interest Claims and the Declaration Award

Financial Freedom shows how someone outside a lender’s workforce can bring the decisive mortgage information forward. The Justice Department’s May 16, 2017 announcement said its investigation arose from a declaration by a consultant for the estates of borrowers with Home Equity Conversion Mortgages. The department announced that the consultant would receive a $1.6 million declaration award.

These reverse mortgages let older homeowners borrow against their home equity, with FHA insurance protecting lenders from loss. Servicing requirements and deadlines govern the lender’s claim for reimbursement. The alleged overpayment in Financial Freedom concerned additional interest on the loans it serviced.

The Justice Department alleged that Financial Freedom sought FHA insurance payments without properly disclosing missed appraisal, claim-submission and foreclosure deadlines that made the mortgagees ineligible for the interest. For someone who works with servicing records, the comparison is concrete: the dated events against the information on the insurance claim. In the Justice Department’s allegation, the deadlines were missed. The interest was claimed anyway.

The Justice Department’s Civil Division’s Commercial Litigation Branch and the U.S. Attorney’s Office for the Middle District of Florida coordinated the matter with the Department of Housing and Urban Development’s Office of Inspector General and Office of General Counsel. The settlement resolved allegations under both the False Claims Act and FIRREA. The declaration supplied the investigation’s starting point, and the award announcement identified the consultant’s separate share.

Is a Settlement the Same as Cash Collected?

A settlement states what a company agrees to pay, while collection concerns money actually received. Financial Freedom’s public announcement described more than $89 million, but HUD’s Inspector General memorandum separated a new settlement obligation of $68,274,944 from earlier refunds. We note the headline counted more than $21 million Financial Freedom had already paid back.

The memorandum reported that HUD’s amount had been paid in full by August 21, 2017. That statement describes the government’s collection. The Justice Department’s separate statement that the consultant would receive an award describes the whistleblower award, with its own recipient and basis.

For a mortgage insider, the same distinction starts inside the business. An insurance claim, a refund and a settlement payment record different movements of money. We follow those movements alongside the declaration, because the award law asks what the United States acquired and how the information contributed to the recovery.

Asset Declarations and Banking-Agency Rewards

FIAFEA’s asset-identification provisions concern a different contribution: locating specific assets that could satisfy a final government judgment or settlement. The declaration identifies the assets, their location and value, and who possesses or controls them. A mortgage insider who knows where recoverable assets sit brings a different kind of information from someone revealing a new fraudulent transaction.

A separate banking-agency reward provision concerns original information leading to specified recoveries and depends on agency discretion and Attorney General concurrence. We assess the transaction and the information with mortgage fraud whistleblower counsel to identify the reward authority that fits.

The Fact You Know Deserves a Case Assessment

If you know what an underwriting file or servicing claim left out, speak with our whistleblower experts about your evidence. We work beside you to build the case around the transaction, the people who adopted the representation and the money it reached. We bring in mortgage fraud whistleblower lawyers who understand declaration awards and government insurance claims, and stay with you through the process.