) subsidiary - MetLife Home Loans LLC - will shell out $123.5
million to the U.S. Department of Justice in order to resolve
allegations of violations related to mortgage lending. The charges
have been brought by the Federal Housing Administration (FHA).
MetLife Home Loans LLC has been accused of making the violations
knowingly. The MetLife Inc. arm was aware that it was violating the
False Claims Act from September 2008 to March 2012. However, it
still went on originating and underwriting mortgage loans insured
by the U.S. government, many of which did not meet federal
MetLife Home Loans, known as MetLife Bank during the time, had
recognized that it had underwritten 1,097 FHA mortgage loans which
violated the FHA requirements. However, the company reported only
321 out of the above-mentioned number to Housing and Urban
Development's (HUD). This irresponsible conduct resulted in
substantial losses for FHA as it had to insure hundreds of loans
ineligible for insurance and later pay insurance claims on those
MetLife Inc., being aware of this, had already set aside fund for
settlement and also fully cooperated with the investigation.
MetLife has been slapped with several lawsuits in the past. The
settlement charges further add to the company's expenses thereby
adversely affecting margins. Lawsuits and related settlement
charges not only affect the company financials, but also hamper the
company goodwill, thereby weighing on investor sentiments.
Other asset managers like JPMorgan Chase & Co. (
), Citigroup Inc. (
), Deutsche Bank AG (
) and Bank of America have also violated the FHA requirements and
have been hit by similar compensation payments in the past.
Currently, MetLife, Inc carries a Zacks Rank #3 (Hold).
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