Capmark Nursing Homes Default, US Sues

The latest effort by US officials to crack down on costly mortgage fraud culminated in a lawsuit Tuesday after two federally-guaranteed mortgage defaults cost the government almost $26m. The US Justice Department filed suit against California-based mortgage lender Capmark Finance, seeking treble damages and penalties. The charges, filed in the US District Court in Los Angeles, alleges Capmark made false statements on applications for federal mortgage insurance covering residential nursing homes. The US Department of Housing and Urban Development guarantees mortgage loans used to acquire health care facilities — including hospitals and nursing homes — under a federal program. But the Justice Department’s case alleges Capmark obtained the HUD guarantees through false applications, costing the federal program nearly $25.9m when the Canoga Care Center in California and the Hudson Valley Care Center in New York both defaulted on their loans. “Mortgage fraud is a top priority for this Administration, especially when public dollars are at stake,” said Tony West, assistant attorney general for the Justice Department’s Civil Division, in a media statement Tuesday. “This complaint sends a clear message that we will aggressively pursue allegations of fraud on federal mortgage insurance programs, which are so vitally important to this economy,” West adds. Joyce Patterson, a spokesperson for Capmark Financial Group, tells HousingWire that the claims against Capmark Finance are “without merit” and the company intends to dispute them “vigorously.” Write to Diana Golobay.