The Ninth Circuit case United States ex rel. Thrower v. Academy Mortgage Corp. provides mortgage lenders, servicers, and other entities submitting claims for payment to the federal government an important reminder of how private litigants create potential liability under the False Claims Act (FCA), even when the government shows little initiative to proceed (or, in this case, even moves to dismiss).
In 2016, Gwen Thrower sued her former employer, Academy Mortgage Corporation, alleging violations of the FCA related to Academy’s compliance with the Federal Housing Administration’s (FHA) Direct Endorsement Program. Thrower’s complaint alleges that Academy effectively created a sham underwriting process for its FHA-insured loans, allowing loans to be approved that did not comply with FHA rules. For example, the complaint alleges Academy implemented “tactics such as miscalculating or misrepresenting borrower’s income or debt obligations, ignoring clear warning signs of fraud, and hiding
