In a civil lawsuit filed in Manhattan federal court, the U.S. Department of Justice said Golden First Mortgage Corp and its president David Movtady "repeatedly lied" to the government between 2002 and 2010 to win Federal Housing Administration insurance for its home loans.
In its complaint against Golden First, the government said the company submitted repeated false certifications that its loans had undergone proper due diligence, and complied with rules of the U.S. Department of Housing and Urban Development, of which the FHA is a part.
Instead, the government said Golden First emphasized speed and volume over quality, paid kickbacks to employees to speed up loan approvals, and used just three people to close 100 to 200 loans a month, making adequate due diligence impossible.
The government said this led to an "extraordinarily high" default rate topping 60 percent on the $707 million of loans made since 2002. It said all 26 Golden First loans in a sampling from 2007 and 2008 had material underwriting violations.