The U.S. Attorney’s office has reached a $1.025 million civil settlement with a Brighton-based mortgage lender and its founder and CEO in connection with allegations that they submitted false insurance claims on mortgages insured by the Department of Housing and Urban Development’s Federal Housing Administration (FHA).

The settlement resolves allegations that First American Mortgage Trust, d/b/a NXTLoan.com, at Barry S. Polack’s direction, ignored FHA’s due diligence requirements and falsely certified that FAMT loans complied with quality control requirements and failed to report known loan defects.

When those loans defaulted, FHA paid insurance claims on loans that never should have been FHA insured. On certain occasions, First American Mortgage Trust also failed to conduct post-closing loan audits.

The settlement also took into consideration First American’s and Polack’s financial circumstances and recent improvements to First American Mortgage Trust’s business practices, according to a statement from the Department of Justice.