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First Union, Feds Agree To HUD Settlement

June 28, 1996

CHARLOTTE, N.C.(AP) _ First Union Mortgage Corp. has agreed to a $7 million settlement with the government over claims that the company had illegally obtained federal mortgage insurance.

The Justice Department sued the company two years ago, seeking $17 million. Some employees at a St. Louis mortgage office allegedly falsified mortgage documents by declaring customers had made adequate down payments.

Forty-three loans defaulted, leaving the Department of Housing and Urban Development with a $4.3 million loss.

First Union did not admit to wrongdoing in settling the lawsuit.

``Obviously First Union and the government have very different views of the case,″ said company spokeswoman Sandra Deem. ``This settlement represents a compromise.″

Deem said the employees who made the loans in St. Louis weren’t fired but no longer are with the company because their jobs disappeared when First Union closed the office in 1989.

The Justice Department said the settlement is the largest involving HUD’s Single Family Mortgage Insurance Program.