Dist. Ct. did not err in granting defendant’s motion for summary judgment in plaintiff’s False Claims Act action, alleging that defendant made materially false representations during course of certifying to HUD that certain borrowers were sufficiently creditworthy under Direct Endorsement Lender program for HUD to issue federal insurance to lenders issuing federal mortgage loans to said borrowers. While plaintiff, who formerly worked for defendant, alleged that she observed defendant act under “reckless and inappropriate underwriting practices” that resulted in defendant making false certifications to HUD that several loans met HUD’s minimum underwriting guidelines, plaintiff failed to present sufficient evidence to establish that defendant’s alleged false certificates caused defaults in said loans. This is so, Ct. of Appeals held, where: (1) plaintiff failed to show that defendant had higher-than-average default rate for its federally-insured loans; and (2) plaintiff could not show, with respect to subject loans, that defaults that led to HUD paying money to lenders to account for said defaults, were caused by defendant’s false statements, as opposed to other, unrelated causes for defaults.
Federal 7th Circuit Court
Civil Court
False Claims Act