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ARTICLE · 20 JUNE 2023

Seventh Circuit Affirms False Claims Act Dismissal On Causation Grounds

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On June 14, 2023, the Seventh Circuit issued a decision in United States ex rel. Michelle Calderon v. Carrington Mortgage Services, LLC, No. 22-1553, 2023 WL 3991013...

United StatesFinance and Banking
Henninger Bullock
Henninger Bullock
Niketa Patel
Niketa Patel
Nicolas E. Rodriguez
Nicolas E. Rodriguez
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On June 14, 2023, the Seventh Circuit issued a decision in United States ex rel. Michelle Calderon v. Carrington Mortgage Services, LLC, No. 22-1553, 2023 WL 3991013, (7th Cir. June 14, 2023), which clarified the plaintiffs' burden to establish causation in connection with False Claims Act ("FCA") claims concerning federally-insured mortgages.

Background

As the Seventh Circuit explained, "[f]ederal mortgage insurance is designed to create a path to homeownership for borrowers who might be considered too risky to qualify for a traditional mortgage because of their lack of savings, poor credit history, or low income. The Direct Endorsement Lender program is one through which [the US Department of Housing and Urban Development ("HUD")] provides mortgage insurance to approved, private lenders. HUD covers the losses of private lenders in the event of a loan default to encourage the issuance of these higher risk mortgages." 2023 WL 3991013, at *1.

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