A reported whistleblower will receive $300,000 as part of the federal government’s $700,000 settlement with a former Bensalem mortgage company accused of submitting fraudulent claims to the government, authorities said.
Cynthia Santone-Smith, an ex-employee of Market Street Mortgage Corp., formerly of Tillman Drive, Bensalem, will receive the money under the settlement, the government said.
U.S. Attorney Patrick Meehan said Tuesday that Market Street Mortgage will pay the money to absolve the government against losses that could result from 83 government-insured mortgage loans worth more than $5 million.
The agreement ends a civil dispute that alleged the company submitted false and fraudulent claims to the Department of Housing and Urban Development and the Department of Veterans Affairs. The claims were to reimburse the company for losses incurred after people couldn’t pay their mortgages and the company underwritten loans resulted in foreclosure.
Santone-Smith of Philadelphia was fired in 1999 after she raised concerns about some employees writing mortgages to disadvantaged clients mortgages that were doomed from the start, Santone-Smith’s lawyer.
“My client was upset at the fraud she observed,” Klein said. “She was happy to assist the government and bring this to their attention, but, as a result, she was ultimately fired.”
Federal authorities said Market Street Mortgage eventually fired employees involved in the alleged fraud.
The company also closed the Bensalem office and then cooperated with the government’s investigation, authorities said.
“We need to protect government programs against fraud. The more the government loses money because of fraud, the fewer people we can help buy homes,” Meehan said in a statement.
People who take advantage of government-insured or guaranteed loans through HUD or the VA are those who would otherwise have difficulty obtaining mortgage loans from banks, according to the government.
Private mortgage lenders such as Market Street Mortgage do much of the work on the government’s behalf, however.
The companies determine whether people qualify for the government-backed mortgages.
It’s the government’s claim that employees of Market Street Mortgage falsified documents such as employment records, credit references and earnings statements to make it appear that people were qualified for government programs.
When reality set in – the people couldn’t pay their mortgages – the government reimbursed Market Street for its losses.
“This settlement not only reimburses the government for losses it has already incurred, it also protects the government from losses that may arise in the future,” Meehan said.