oversight

                                                 U.S. DEPARTMENT OF
                                HOUSING AND URBAN DEVELOPMENT
                                         OFFICE OF INSPECTOR GENERAL


                        
 
                                            September 12, 2016
                                                                                               MEMORANDUM NO:
                                                                                               2016-DE-1802



Memorandum
TO:            Dane M. Narode
               Associate General Counsel, Office for Program Enforcement, CACC

               //signed//
FROM:          Ronald J. Hosking
               Regional Inspector General for Audit, Denver Region, 8AGA

SUBJECT:       Final Civil Action: RANlife, Inc., Settled Allegations That It Violated the False
               Claims Act When Originating, Underwriting, and Endorsing Certain Loans With
               Federal Housing Administration Insurance


                                            INTRODUCTION

We investigated alleged violations of Federal Housing Administration (FHA) regulations by
RANlife, Inc. We reviewed the single-family FHA loan files processed by RANlife to determine
whether RANlife complied with U.S. Department of Housing and Urban Development (HUD)
rules and regulations in originating, underwriting, and endorsing the loans for FHA insurance.

                                              BACKGROUND

RANlife is a residential mortgage lender incorporated in Salt Lake City, UT. It originates and
underwrites residential mortgage loans that are insured by HUD FHA. Between January 1, 2007,
and March 31, 2012, RANlife originated, underwrote, and endorsed 96 mortgage loans for FHA
insurance. As a result of the review, the government contends that 29 loans went into default
within the first 2 years of the loan and ultimately resulted in FHA insurance claims being paid by
HUD. FHA insurance protects lenders, such as RANlife, against losses due to defaults on FHA-
insured mortgage loans. If the borrower of an FHA-insured mortgage loan defaults, the holder of
the mortgage may submit a claim to HUD for any loss from the default. In return, lenders are
required to comply with HUD rules and regulations in originating and underwriting FHA-insured
mortgage loans to ensure that the borrowers and loans are creditworthy of FHA insurance.

                                        RESULTS OF REVIEW
                                             Office of Audit Region 8
                                   1670 Broadway, 24th Floor, Denver, CO 80202
                                     Phone (303) 672-5452, Fax (303) 672-5006
                           Visit the Office of Inspector General Web site at www.hudoig.gov.
 
                                    



Based in part on our review, the United States contended that for certain loans, RANlife failed to
comply with HUD rules and regulations in originating, underwriting, and endorsing the loans for
FHA insurance.

On November, 23, 2015, RANlife entered into a settlement agreement with the United States.
To avoid the delay, uncertainty, inconvenience, and expense of lengthy litigation of the claims
made to HUD on certain defaulted loans and in consideration of the mutual promises and
obligations of the settlement agreement, RANlife agreed to pay FHA more than $1 million. The
settlement agreement was neither an admission of liability by RANlife nor a concession by the
United States that its claims were not well founded.

                                       RECOMMENDATION

We recommend that HUD’s Office of General Counsel, Office for Program Enforcement,

1A. Acknowledge that the attached settlement agreement for $1,032,715 represents an amount
    due HUD.

        As of November 23, 2015, the settlement agreement of $1,032,715 was reached, and it
        represents an amount due HUD. Included in the settlement agreement is a repayment
        agreement explaining that RANlife would pay $173,853 and $258,862 within 5 business
        days after the effective date of the agreement and make two additional payments of
        $300,000 ($600,000 total) 1 year and 2 years from the effective date, with final payment
        expected by November 23, 2017. In accordance with HUD Handbook 2000.6, REV-4, the
        final action target date will be set at December 23, 2017 (30 days from the final date on
        which payment is expected). At issuance of this memorandum, HUD’s Office of Inspector
        General will enter a management decision into HUD’s Audit Resolution and Corrective
        Action Tracking System, along with any supporting payment information received to date.




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