Whistleblower lawsuit alleges Lennar’s Eagle Home Mortgage approved unqualified borrowers, misled feds

Lending

Lennar subsidiary Eagle Home Mortgage is in hot water yet again.

Just a month after settling charges with the Department of Justice for failing to comply with FHA lending standards, a new lawsuit brings the lender back into the crosshairs of justice.

According to a lawsuit filed in November, Eagle Home Mortgage falsified borrower documents to increase the likelihood of approval, approved borrowers who were unqualified, and hid negative findings on audited loans from regulators.

But Eagle is apparently still desirable, despite the pending lawsuit. On Wednesday, HousingWire reported that Movement Mortgage is buying Eagle’s retail operations from Lennar, although it should be noted that the lawsuit in question deals with the in-house builder mortgage division of Eagle Home, which is remaining part of Lennar. Movement Mortgage is only buying Eagle Home’s retail operations, which are not part of the lawsuit.

According to the lawsuit, filed in Florida by former Senior Quality Control Manager Wanda Burling, Eagle Home Mortgage approved unqualified borrowers on numerous occasions, hid their wrongdoings, and pressured her to keep quiet.

Burling claims that when she pointed out her findings to an Eagle vice president, she was warned not to contact authorities and was later fired for unsubstantiated claims of poor performance. Burling said she first noticed a problem when she was contacted by an elderly reverse mortgage borrower who said he thought his loan officer at Eagle lied and took advantage of him.

After reviewing his loan file, Burling found that the application was not completed properly, that the required disclosures were never sent, that funds were taken from the borrower before he signed an Intent to Proceed, and that the LO was not even licensed to do business in that state.

According to the complaint, when Burling brought this to the attention of her superior, she was told to let it go and not to advise the borrower to get an attorney unless she wanted to be “blackballed” from the mortgage industry.

In the preceding months, Burling uncovered numerous other violations, including the falsification of documents, omitting debts, and adding income and cash reserves to indicate that borrowers had more money than they actually did.

In these instances, Burling alleges the originator, appraiser and processor involved were related to one another, a fact that was not disclosed to borrowers.  

“These individuals were manipulating data as to qualify and approve the loans when they should not have been qualified,” the lawsuit alleges.

Burling also claims that a number of loans were approved even though the borrowers did not have enough funds to qualify, and that the defendants actively hid this fact from the federal government.

When entering loans pulled for audit into the ACES audit software, the defendants would incorrectly place negative findings in the “notes” section rather than the “reporting” section, a practice that would effectively hide findings from any agency performing an audit and that stands in violation of the False Claims Act, according to the suit.

Burling claims she was pressured by her superiors not to report her findings, saying that she was told on numerous occasions by an Eagle vice president that Eagle is a “good ol’ boy group,” that senior management did not like strong women, and that she should be careful because they were “after her.”

Burling claims she was also told that management did not like working with her, as they felt she was only out to find things they were doing wrong.

When she was terminated in March 2017, the company cited “poor performance,” but was unable to explain how this determination fit in with the fact that she received strong performance reviews and a bonus.

When human resources intervened, Burling claims she was told, “We do not like your management style, and we’ll leave it at that.”

Burling is suing for backpay, benefits, lost earning capacity and compensatory damages.

[Update: This article is updated with additional information clarifying which part of Eagle Home Mortgage is involved in the alleged action.]

Leave a Reply