Aurora Loan Services LLC will pay a $41 million fine for what the U.S. Attorney says were fraudulent loans from 2004-08 under an agreement with the government announced Thursday.
The mortgage company that was headquartered in Littleton now has minimal assets and no employees, according to a news release from the U.S. Attorney District of Colorado’s office.
During the four-year period in question, the company, a subsidiary of Lehman Brothers, sold loans that it said had gone through a “pre-funding fraud detection” review when it fact they hadn’t, according to the release.
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In 2006, some of those loans began defaulting at higher rates, causing investors who had purchased mortgage-backed securities containing those loans to lose money.
Thursday’s agreement was a settlement under the Financial Institutions Reform, Recovery and Enforcement Act. The $41 million settlement was not an admission of liability by Aurora Loan Services, the news release said.
