National City Corp.'s (NCC) mortgage banking unit will pay the United States $4.6 million to settle allegations that it had improperly submitted 58 late endorsement loans for insurance coverage, the U.S. Department of Justice said late Thursday. National City has "direct endorsement" authority to underwrite HUD-insured mortgage loans and submit them to HUD for insurance endorsement. Direct endorsement is a mechanism that allows a pre-approved lender to loan a low or moderate income borrower money for a mortgage, and protects that lender against loss in case of default. HUD regulations require that the lender make certain certifications to the Federal Housing Administration when it is submitting loans for insurance coverage more than 60 days from the loan closing, referred to as "late endorsement loans." The government had alleged that National City improperly submitted 58 late endorsement loans for FHA insurance coverage that were 30 days or more in arrears, a claim the company has denied. "HUD's vital mortgage insurance programs assist lenders that make the American dream of home ownership accessible to more people, but lenders must follow HUD's rules and be held accountable if they knowingly submit loans that are not eligible for insurance," said Gregory G. Katsas, acting Assistant Attorney General for the Justice Department's Civil Division, in a press statement. Disclosure: The author held no positions in NCC when this story was originally published. HW reporters and writers follow a strict disclosure policy, the first in the mortgage trade.