First Horizon National Corp will pay $212.5 million to resolve the DOJ and HUD investigation into mortgage loans made by First Tennessee Bank, according to media reports last week.
The settlement continues the U.S. Government’s pursuit of banks that made bad loans on real estate immediately prior to or during the financial crisis. The U.S. has also settled its investigation into MetLife and the S&P lawsuit over credit ratings this year. Morgan Stanley has also announced an agreement to settle the investigation into its mortgage practices for $2.6 billion. Last year, banks paid billions to settle government allegations of violations of the False Claims Act and FIRREA.
The investigation looked into underwriting and origination of FHA insured loans made by First Tennessee Bank between 2006 and 2008. Previous media coverage indicates that the government’s investigation involved the False Claims Act.