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Economy and Business


U.S. Bank agrees to pay $200 million for bad loans it got the feds to back
Cincinnati-based bank admits it certified and failed to report bad loans that the FHA ended up backing
by WKSU's M.L. SCHULTZE
and TIM RUDELL


Web Editor
M.L. Schultze
 
Steven Dettelbach says the FHA backing is supposed to help legitimate owners enter the housing market, not to help banks cut corners.
Courtesy of File photo
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A Cincinnati-based bank has agreed to pay out $200 million to the federal government to settle charges it wrote bad home loans that taxpayers ended up insuring. 

LISTEN: U.S. Bank's big settlement

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The settlement with U.S. Bank covers thousands of loans from 2006 through 2011 that ended up being insured by the Federal Housing Administration. The bank admitted that it kept processing loans it certified could legitimately be backed by the FHA. But many of the loans ended up turning sour and the FHA had to pay out when they went bad. Steven Dettelbach is the U.S. attorney for Northern Ohio. He says the bank knew what it was doing.

 “The FHA program is intended to be a hand up for certain people in our community who need some help getting a home. It’s not supposed to be a handout for banks that want to flout the rules and not follow internal procedures to make sure that they’re safety protecting the money that they lend out.”

In the settlement, the bank admitted it failed to audit its portfolio, report problem loans or correct the problems.  The U.S. attorneys’ office says U.S. Bank’s loans damaged the housing market in a way that is still being felt.

 

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