Court Opinion

ID: 9402014
Source: CourtListenerOpinion
Date Created: 2023-06-14 20:00:51.814641+00
Date Added: 2024-06-11T17:19:56.952719
License: Public Domain

In the

    United States Court of Appeals
                For the Seventh Circuit
                    ____________________
No. 22-1553
UNITED STATES OF AMERICA ex rel.
MICHELLE CALDERON,
                                               Plaintiff-Appellant,

                                v.

CARRINGTON MORTGAGE SERVICES, LLC,
                                              Defendant-Appellee.
                    ____________________

       Appeal from the United States District Court for the
        Southern District of Indiana, Indianapolis Division.
      No. 1:16-cv-00920-RLY-MJD — Richard L. Young, Judge.
                    ____________________

    ARGUED NOVEMBER 30, 2022 — DECIDED JUNE 14, 2023
               ____________________

   Before WOOD, JACKSON-AKIWUMI, and LEE, Circuit Judges.
   WOOD, Circuit Judge. Michelle Calderon sued Carrington
Mortgage Services on behalf of the United States for alleged
violations of the False Claims Act. Calderon is a former em-
ployee of Carrington. She alleges that Carrington made false
representations to the U.S. Department of Housing and Urban
Development (HUD) in the course of certifying residential
2                                                   No. 22-1553

mortgage loans for insurance coverage from the Federal
Housing Administration (FHA).
   Carrington moved for summary judgment on the basis
that Calderon did not meet her evidentiary burden on two el-
ements of False Claims Act liability. First, it asserted that she
could not show that the allegedly false representations were
material to HUD’s decisions to pay out various claims under
the federal mortgage insurance program. Second, it con-
tended that she could not show that the false representations
caused HUD to suﬀer a monetary loss.
   The district court sided with Carrington on both elements
and granted summary judgment, disposing of Calderon’s
lawsuit. Though we conclude that Calderon does have suﬃ-
cient proof of materiality, we agree that she has not met her
burden of proof on the element of causation. We therefore af-
ﬁrm the district court’s decision.
                                I
                               A
    Federal mortgage insurance is designed to create a path to
homeownership for borrowers who might be considered too
risky to qualify for a traditional mortgage because of their
lack of savings, poor credit history, or low income. The Direct
Endorsement Lender program is one through which HUD
provides mortgage insurance to approved, private lenders.
HUD covers the losses of private lenders in the event of a loan
default to encourage the issuance of these higher risk mort-
gages. Carrington has been a Direct Endorsement Lender for
many years.
   If a potential Direct Endorsement Lender such as Carring-
ton wishes to cover a loan with federal mortgage insurance, it
No. 22-1553                                                         3

must ﬁrst submit to an underwriting process during which it
assesses the prospective borrower’s eligibility for federal in-
surance. HUD publishes handbooks that provide the under-
writing guidelines for lenders and promulgates regulations
that govern Direct Endorsement lending. 1 Carrington hires its
own Direct Endorsement Underwriters and operates its own
quality control system. Its goal is to ensure that it properly
evaluates a borrower’s ﬁnancial information, determines the
degree of risk involved in issuing the loan, and complies with
all federal requirements. After the lender approves the loan,
the lender submits the loan to HUD for review and endorse-
ment. Through this submission, the lender certiﬁes to HUD
that the borrower meets the minimum standards of HUD’s
underwriting guidelines. HUD relies on these certiﬁcations to
issue the necessary insurance coverage.
    Next, all loans submitted for federal insurance are subject
to a pre-endorsement review by HUD. The parties dispute the
scope of that review, but HUD’s own regulations indicate that
the agency is focused on verifying that all necessary docu-
ments are present, rather than on assuring the accuracy of the
information it ﬁnds in the loan ﬁle. See HUD, 4155-2, Lender’s
Guide to the Single Family Mortgage Insurance Process
8.C.1.b (2010). Once a loan passes pre-endorsement review,
HUD issues federal insurance to the lender for that loan. If a
loan ﬁle is missing some of the required documentation, the
lender instead receives a notice of return that speciﬁes the

   1 See, e.g., HUD, 4155-1, Mortgage Credit Analysis for Mortgage In-
surance, at https://www.hud.gov/sites/documents/41551HSGH.PDF
(“HUD 4155-1”); HUD, 4155-2, Lender’s Guide to the Single Family Mort-
gage    Insurance     Process,   at   https://www.hud.gov/sites/docu-
ments/41552HSGH.PDF (“HUD 4155-2”).
4                                                             No. 22-1553

deﬁciencies and corrective action needed before the loan can
be federally insured.
    HUD may conduct further examination, even after it is-
sues the insurance for the lender. It subjects approximately 5
percent of loans to a post-endorsement technical review in
which it evaluates the loan using the federal underwriting re-
quirements and conﬁrms the accuracy of the information in
the loan ﬁle. When a post-endorsement review reveals mate-
rial noncompliance with HUD’s underwriting guidelines,
HUD will require the lender to agree to an indemniﬁcation
agreement, under which the lender must abstain from ﬁling
an insurance claim in the case of default or reimburse HUD if
HUD makes a payment on an insurance claim for that mort-
gage. Federal regulations deﬁne which violations may qualify
as “serious and material.” 24 C.F.R. § 203.255(g)(3). 2

    2 Because materiality is central to this appeal, we furnish the full text
of section 203.255(g)(3) here:
        (3) Serious and material violation. The mortgagee shall indemnify
    HUD for an FHA insurance claim paid within 5 years of mortgage in-
    surance endorsement, if the mortgagee knew or should have known
    of a serious and material violation of FHA origination requirements,
    such that the mortgage loan should not have been approved and en-
    dorsed by the mortgagee and irrespective of whether the violation
    caused the mortgage default. Such a serious and material violation of
    FHA requirements in the origination of the mortgage may occur if the
    mortgagee failed to, among other actions:
       (i) Verify the creditworthiness, income, and/or employment of the
    mortgagor in accordance with FHA requirements;
        (ii) Verify the assets brought by the mortgagor for payment of the
    required down payment and/or closing costs in accordance with FHA
    requirements; or
No. 22-1553                                                              5

                                    B
    Calderon worked at Carrington from March 2013 to
March 2015 as a Direct Endorsement Underwriter. During
that time, HUD classified loans in one of four ways following
a post-endorsement review: conforming, deficient, unac-
ceptable, or mitigated. Deficient loans were those with docu-
mentation deficiencies or processing errors that presented
only low-risk issues. Unacceptable loans contained a high-
risk error or omission and did not meet the basic eligibility
requirements for federal mortgage insurance. Once a loan
was deemed unacceptable, lenders had an opportunity to ex-
plain or correct the identified deficiencies. If they were able to
rectify the problem, the loan was reclassified as mitigated. If
not, HUD issued an indemnification agreement.
    Concerned about what she was seeing on the job, includ-
ing allegedly reckless and inappropriate underwriting prac-
tices, Calderon brought this lawsuit against Carrington under
the False Claims Act. See 31 U.S.C. § 3729. The Act allows a
private party to sue for violations on behalf of the govern-
ment; successful suits result in a payment to the initiator. Id.
§ 3730. A plaintiff such as Calderon must plead and ulti-
mately prove four elements: 1) the defendant made a false

        (iii) Address property deficiencies identified in the appraisal af-
   fecting the health and safety of the occupants or the structural integ-
   rity of the property in accordance with FHA requirements, or
        (iv) Ensure that the appraisal of the property serving as security
   for the mortgage loan satisfies FHA appraisal requirements, in accord-
   ance with § 203.5(e) [the regulation governing appraisals in the Direct
   Endorsement process].
6                                                     No. 22-1553

statement (falsity); 2) the defendant knew the statement was
false (knowledge); 3) the false statement was material to the
government’s payment decision (materiality); and 4) the false
statement caused the government’s loss (causation). United
States v. Molina Healthcare of Ill., Inc., 17 F.4th 732, 739–40 (7th
Cir. 2021).
    Understanding the process by which federal mortgage in-
surance is issued clariﬁes how a company such as Carrington
might be held liable under the False Claims Act. The alleged
false statements occur if Carrington wrongly certiﬁes that a
loan meets federal underwriting requirements. If HUD would
have withheld federal insurance or issued an indemniﬁcation
agreement had it known of the noncompliance, then the false
certiﬁcation of compliance is material to HUD’s payment de-
cision. And if the loan defaults and HUD covers the cost of the
default, then the false certiﬁcation of compliance causes the
government’s loss when the loan’s noncompliance is the fore-
seeable cause of the default.
                                 C
   Calderon asserts that during her time at Carrington she
observed “reckless and inappropriate underwriting practices
at Carrington,” including the false certification of several
loans as meeting HUD’s minimum underwriting guidelines.
Essentially, she alleges, if HUD had known of the errors in
Carrington’s loan files, it would not have endorsed those
loans for federal insurance or, in the alternative, if all Carring-
ton’s loans had been subjected to a full post-endorsement re-
view, many of them would have been characterized as unac-
ceptable and HUD would have issued indemnification agree-
ments. Further, if Carrington had complied with HUD’s un-
derwriting guidelines, fewer of its federally insured loans
No. 22-1553                                                  7

would have defaulted because only borrowers with appropri-
ate risk levels would have received loans.
    To meet her evidentiary burden, Calderon provided a
sample “re-underwrite” of 349 federally insured loans that
Carrington issued between 2013 and 2015; all of those loans
later defaulted. Calderon’s analysis identifies several alleged
deficiencies in these loan files, to which we refer as the “re-
viewed loans.” The flaws included instances where Carring-
ton overstated the borrower’s income or provided insufficient
documentation. Calderon also gives examples where the orig-
inal underwriter improperly omitted borrower debt, failed to
assess creditworthiness, permitted excessive debt-to-income
ratios, or improperly assessed compensating factors—that is,
borrower characteristics that can offset a bad credit score,
such as documented cash reserves, no discretionary debt, sig-
nificant additional income, or residual income.
    Calderon also offered herself as an expert and intended to
testify about the shortcomings in Carrington’s quality control
department, as well as about the elements of materiality and
causation. But the district court excluded the bulk of her ex-
pert opinion. After Calderon was precluded from testifying
about certain aspects of materiality and causation, Carrington
moved for summary judgment on just those elements, argu-
ing that Calderon could not meet her evidentiary burden on
the available record. The district court granted the motion,
agreeing with Carrington that as a matter of law Calderon
could not prove either materiality or causation. Calderon has
appealed.
8                                                    No. 22-1553

                                II
    Calderon ﬁrst challenges the district court’s decision un-
der Federal Rule of Evidence 702 to exclude portions of her
own proﬀered expert testimony. Calderon also disputes the
district court’s decision to admit the testimony of Carring-
ton’s expert, Kori Keith. We decide independently whether
the district court followed Rule 702’s framework. United States
v. Brown, 973 F.3d 667, 703 (7th Cir. 2020). We review the
court’s decision to admit or exclude expert testimony for
abuse of discretion. Id.
   Federal Rule of Evidence 702 governs the admissibility of
expert testimony and requires that the district court deter-
mine that a witness is qualiﬁed as an expert by her
“knowledge, skill, experience, training, or education.” Rule
702 then sets out four factors to determine admissibility:
       (a) the expert’s scientiﬁc, technical, or other specialized
    knowledge will help the trier of fact to understand the ev-
    idence or to determine a fact in issue;
       (b) the testimony is based on suﬃcient facts or data;
       (c) the testimony is the product of reliable principles
    and methods; and
       (d) the expert has reliably applied the principles and
    methods to the facts of the case.
    The district court held that Calderon could not oﬀer her
opinion about the eﬀectiveness of Carrington’s quality control
program because she never worked in the quality control de-
partment, did not review any manuals or procedures govern-
ing that department, and did not compare Carrington’s qual-
ity control processes to those required by HUD. In so ruling,
the court probably overdid it by insisting that Calderon
No. 22-1553                                                   9

needed to have worked in Carrington’s own quality control
department to develop the necessary expertise. Nonetheless,
its overall criticisms of Calderon’s methods are sound. Given
that Calderon did not read any of the materials that detailed
Carrington’s policies and practices, she is not qualiﬁed to
opine on their eﬀectiveness. The court was well within its
rights to exclude this portion of her proﬀered expert testi-
mony.
    The district court also excluded the bulk of Calderon’s
opinions on materiality and causation, ﬁnding them “too
speculative.” It reasoned that because Calderon never worked
for HUD or in loan servicing, she could not opine about “what
is material to HUD’s decision to pay out claims,” nor could
she suggest that all of Carrington’s false statements caused a
loss to HUD. But the district court did permit Calderon to tes-
tify from her own experience and explain what happened
when she saw HUD reject loans or require indemniﬁcation.
    Again, the district court placed too much weight on where
Calderon worked. Rule 702 does not suggest that specialized
knowledge can be developed only in certain ways, and the
Supreme Court’s decision in Kumho Tire Co. v. Carmichael, 526
U.S. 137, 150 (1999), points in the opposite direction—experts
and expertise come in many diﬀerent forms. For present pur-
poses, working for HUD is not the sole path for a proﬀered
expert to become suﬃciently knowledgeable about HUD’s
decision-making processes or the causes of its payments on
federal insurance claims. Many people with long careers in
the residential mortgage industry can and do develop this ex-
pertise. Nevertheless, the district court did not abuse its dis-
cretion in its ultimate ruling. Both materiality and causation
are determined through nuanced, multi-factored analyses.
10                                                  No. 22-1553

The district court correctly recognized that Calderon cannot
testify about the existence of a conclusive list of what is mate-
rial to HUD’s insurance-endorsement decisions or requests
for indemniﬁcation. Nor could she opine that certain defects
always cause losses to HUD.
    On appeal, Calderon claims that the scope of her expert
testimony was narrower than the district court intimated. For
example, as to materiality, she says that her opinion would be
“that a particular loan was insured with a material defect that
she has seen in her experience to result in rejection when HUD
is aware of the defect.” In our view, the district court’s order
contemplated the admission of such testimony. The district
court said that Calderon “can discuss her experience and why
her loans have been rejected in the past” and that she could
“give her opinions on [the reviewed] loans so long as they
stem from her experience as an underwriter” and do not “in-
vade[] the province of the jury.” Otherwise, the court was well
within its discretion to confine Calderon’s expert opinions to
the bounds of her actual experience. The court reasonably
prevented her from offering more sweeping conclusions
about materiality and causation.
    Finally, the district court admitted Carrington’s rebuttal
expert, Kori Keith, even though Keith lacked some of the un-
derwriting qualifications that Calderon has. Calderon argues
that if Calderon’s testimony was excluded, Keith’s testimony
must be excluded too. But the scope of Keith’s expert testi-
mony was different from the scope of Calderon’s. Keith was
called to testify about underwriting practices generally and
the purpose of the federal mortgage insurance program. She
also planned to rebut the process Calderon followed when
she evaluated the reviewed loans. The district court did not
No. 22-1553                                                    11

abuse its discretion when it determined that Keith’s twenty-
plus years of experience in the residential mortgage industry
qualified her as an expert, and that her review of the com-
plaint, the reviewed loans, and the applicable HUD regula-
tions were sufficient to support her proffered opinion.
                               III
    This brings us to the heart of the appeal: Calderon’s chal-
lenge to the grant of summary judgment in favor of Carring-
ton. Our examination of that decision is de novo. Dunlevy v.
Langfelder, 52 F.4th 349, 353 (7th Cir. 2022). Summary judg-
ment is appropriate only when “there is no genuine dispute
as to any material fact and the movant is entitled to judgment
as a matter of law.” Fed. R. Civ. P. 56(a). “We draw all justifi-
able inferences in favor of the nonmoving party” and view the
facts in the light most favorable to Calderon, the nonmovant.
Scaife v. U.S. Dep’t of Veterans Affairs, 49 F.4th 1109, 1115 (7th
Cir. 2022).
    Calderon’s primary evidence of both materiality and cau-
sation comes from her review of the 349 loans. The district
court concluded that her evidence failed to support both these
elements. We look first at materiality, and then at causation.
                                A
    Under the False Claims Act, a false claim is “material” if it
has a “natural tendency to influence, or be capable of influ-
encing, the payment or receipt of money or property.” 31
U.S.C. § 3729(b)(4). In Universal Health Services, Inc. v. United
States ex rel. Escobar, the Supreme Court clarified that a false
claim would be material in “two circumstances”: “(1) ‘[if] a
reasonable man would attach importance to [it] in determin-
ing his choice of action in the transaction’; or (2) if the
12                                                  No. 22-1553

defendant knew or had reason to know that the recipient of
the representation attaches importance to the specific matter
‘in determining his choice of action,’ even though a reasona-
ble person would not.” 579 U.S. 176, 193 (2016) (alterations in
original) (quoting the Restatement (Second) of Torts § 538
(1976)).
    Escobar did not end with the identification of those two cir-
cumstances; it also provided additional guidance on how to
approach materiality in these cases. For example, it confirmed
that mere regulatory violations, even if the regulation is la-
beled by the government as “material” to governmental deci-
sion-making, are not automatically material for the purposes
of the Act without additional evidence that the government
“consistently refuses to pay claims in the mine run of cases
based on noncompliance with the particular statutory, regu-
latory, or contractual requirement.” Id. at 195. Additionally,
“if the Government pays a particular claim in full despite its
actual knowledge that certain requirements were violated,
that is very strong evidence that those requirements are not
material.” Id.
    The district court held that Calderon had failed to estab-
lish materiality because she did not present evidence that
would permit a reasonable factfinder to conclude that HUD
viewed the alleged underwriting deficiencies as important. It
also criticized her for failing to rebut the possibility that HUD
was aware of Carrington’s potential violations but took no ac-
tion. Although the question is close, we conclude that when
all permissible inferences are properly drawn in Calderon’s
favor, there is enough evidence of materiality to clear the
summary judgment hurdle.
No. 22-1553                                                 13

    Calderon proffered evidence that (if believed) would
show that the deficiencies she identified in the reviewed loans
are material under 24 C.F.R. § 203.255(g). As we noted earlier,
that regulation explains that “serious and material viola-
tion[s]” will require the lender to indemnify HUD because,
but for those violations, “the mortgage loan should not have
been approved and endorsed.” Id. § 203.255(g)(3). Relevant
material violations include the failure to:
      (i) verify the creditworthiness, income, and/or
      employment of the mortgagor in accordance
      with FHA requirements; (ii) verify the assets
      brought by the mortgagor for payment of the re-
      quired down payment and/or closing costs in
      accordance with FHA requirements….
Id. § 203.255(g)(3)(i)–(ii). In the reviewed loans, Calderon
found several instances of overstated income, improperly
omitted debt, and insufficient documentation of assets, in-
come, and debt—problems that mirror the material violations
identified in the regulation. And even though Escobar in-
structs that simply labeling these violations as “material” in
the regulation does not establish materiality without further
proof, that does not mean that the regulatory evidence is be-
side the point. The regulations provide some guidance, in
HUD’s own voice, about the false certifications that would
improperly induce the issuance of federal insurance, and
those are precisely the false certifications present here.
    Calderon also proffered evidence that HUD issued indem-
nification agreements to Carrington when faced with similar
loan deficiencies in the past. She did so with her own expert
testimony. As the district court ruled, Calderon may testify
that she has seen certain types of underwriting deficiencies in
14                                                No. 22-1553

her experience, and that those deficiencies resulted in re-
quests for indemnification from HUD. On top of that, Calde-
ron proffered a series of letters that HUD sent to Carrington,
detailing material loan deficiencies that HUD identified dur-
ing its post-endorsement technical review of nine Carrington
loans. HUD explained that it would issue an indemnification
agreement if the deficiencies were not addressed. The types
of material deficiencies that HUD identified in those letters—
improper sourcing of closing funds, failure to explain large
deposits, inadequate closing funds, failure to analyze debts
correctly, overstated income, and inadequate documentation
for credit analysis—are akin to the deficiencies that Calderon
identified in the reviewed loans. These letters therefore con-
firm that HUD “refuses to pay claims … based on noncompli-
ance” with these kinds of underwriting requirements. See Es-
cobar, 579 U.S. at 195. The letters also show that Carrington
was on notice about which false certifications were serious in
HUD’s eyes and “had reason to know that the recipient of the
representation attaches importance to the specific matter.” Id.
at 193.
    Carrington responds that “HUD’s conclusion that a spe-
cific defect is material when reviewing one loan cannot sup-
port a reasonable inference that similar defects will always be
material for all loans.” But this line of argument asks us to
weigh the evidence, a task that is best reserved for a fact-
finder. For example, Calderon says that overstated income in
a particular borrower’s loan file is a serious deficiency; Car-
rington responds that overstated income occurs in varying
degrees and does not, in every instance, constitute major non-
compliance. Carrington’s rebuttal does not entitle it to sum-
mary judgment, because the degree of the deficiency is genu-
inely disputed.
No. 22-1553                                                    15

    Similarly, Carrington points out that it was able to miti-
gate several of the deficiencies identified in the letters and
was forced to indemnify only one loan in the nine that were
reviewed. It argues that the relative ease with which it could
have mitigated any alleged deficiency is significant because,
once mitigated, HUD will make payments on any insurance
claims; HUD’s willingness to issue payment undermines the
materiality of the violation. But again, the fact-intensive job of
evaluating the identified deficiencies and deciding which
ones could have been mitigated is a job best left to the jury.
    At summary judgment, the question is only whether Cal-
deron has proffered sufficient evidence to warrant a reasona-
ble inference in her favor. We do not doubt that Carrington
might be able to convince a rational trier of fact that the de-
fects in the reviewed loans are factually distinguishable from
the material defects identified in HUD’s letters or are capable
of correction. But that does not warrant summary judgment.
Calderon has identified several false certifications in 349
loans, she has shown that those false certifications are mate-
rial according to federal regulations and her own underwrit-
ing experience, and she has proffered evidence that HUD has
in the past deemed similar violations material. A factfinder
would be permitted to infer materiality from this evidence.
    We are also concerned that the district court placed too
much weight on its belief that HUD knew about Carrington’s
false certifications. If HUD had knowledge of the false certifi-
cations and nonetheless issued the insurance (or refrained
from demanding indemnification), Escobar instructs that this
would be strong evidence that the certifications were not ma-
terial. The district court was impressed by HUD’s pre-en-
dorsement review of all Carrington’s loan files, the selective
16                                                 No. 22-1553

post-endorsement technical reviews of a sizable sample, and
Calderon’s own allegations, which she reported to HUD
when she initiated this lawsuit.
    But the extent of HUD’s knowledge is contested. The rec-
ord does not establish that HUD’s pre-endorsement review
would have revealed widespread underwriting violations.
HUD’s own regulations suggest that the pre-endorsement re-
view looks only to see if the required documents are all in the
file; the content of those documents is not examined. For that
matter, HUD’s post-endorsement reviews provide infor-
mation on only a select sample of Carrington’s loans and do
not show that HUD possessed a broad awareness of all al-
leged deficiencies in Carrington’s federally insured loans. Fi-
nally, the record is unclear as to how much HUD learned from
Calderon; in her deposition, she could not remember what
she had told government representatives in those initial con-
versations.
    In United States ex rel. Yannacopoulos v. General Dynamics,
we rested our materiality ruling on the fact that the agency
had “actually learned of the supposed misrepresentation.”
652 F.3d 818, 831 (7th Cir. 2011). Such certainty of knowledge
is a far cry from the district court’s conclusion here that “HUD
was likely aware of any violation.” To infer HUD’s
knowledge is to draw an inference in the moving party’s favor
from a heavily disputed set of facts. A juror could reasonably
conclude that HUD was unaware of Carrington’s alleged cul-
ture of reckless underwriting. The extent of HUD’s
knowledge is thus still up for grabs; that issue was not suita-
ble for summary judgment.
No. 22-1553                                                      17

                                 B
    Turning now to causation, we must briefly address the
False Claims Act’s damages provisions. Some circuits have in-
terpreted the Act as creating “two sorts of liability.” See
United States ex rel. Schwedt v. Planning Research Corp., 59 F.3d
196, 199 (D.C. Cir. 1995). As they see it, the first form of liabil-
ity can be found in the Act’s civil penalty, which, according to
Schwedt, may be imposed “regardless of whether the submis-
sion of the claim actually causes the government any dam-
ages; even if the claim is rejected, its very submission is a basis
for liability.” Id. The second form of liability they identify is
the Act’s provision of treble damages, which is triggered only
“for damages that the government sustains because of the
submission of the false claim.” Id. Under this understanding,
Calderon’s claims could move forward as claims for civil pen-
alties, based on her satisfaction of the other three elements of
a claim under the Act.
    Though Calderon suggested to the district court that she
should proceed to trial even without sufficient evidence of
causation (i.e., by using the first approach mentioned above),
she has not renewed that argument on appeal. Because she
has not asked us to do so, we do not consider the possibility
of a claim limited to civil penalties. Whether we agree with
the Schwedt approach is a question we leave for another day.
    In order to avoid summary judgment, therefore, Calderon
had to proffer evidence covering all four elements of the
claim, including causation. Indeed, since United States v. Luce,
we have required a plaintiff to establish both actual and prox-
imate cause to recover under the Act. 873 F.3d 999, 1014 (7th
Cir. 2017). Carrington’s false certifications to HUD must not
only be material, they also must cause a foreseeable harm: “a
18                                                  No. 22-1553

type that a reasonable person would see as a likely result of his
or her conduct.” Id. at 1012 (emphasis in original) (quoting
Blood v. VH-1 Music First, 668 F.3d 543, 546 (7th Cir. 2012)).
Simple but-for causation is not enough.
     To show proximate causation, Calderon had to put for-
ward evidence indicating that the false certifications in the re-
viewed loans were the foreseeable cause of the later defaults.
We focus on the defaults because that is what triggers HUD’s
payment obligations under the federal insurance program.
We recognize that when we adopted the proximate-cause
standard in Luce, we did not explicitly state that proving prox-
imate cause in cases about federal mortgage insurance re-
quires proving the causes of defaults. We did, however, rely
heavily on the Fifth Circuit’s reasoning in United States v. Mil-
ler, 645 F.2d 473 (5th Cir. 1981), and the Third Circuit’s rea-
soning in United States v. Hibbs, 568 F.2d 347, 351 (3d Cir.
1977). In both of those cases, the courts made explicit state-
ments about the need to prove what caused the defaults.
    In Miller, the Fifth Circuit held that “[i]n the context of a
federal housing case, the United States must show that the
false statements in the application were the cause of subse-
quent defaults.” 645 F.2d at 476. And in Hibbs, the Third Cir-
cuit said that because it is the default that causes the loss to
the United States, a plaintiff must show some connection be-
tween the false certifications and the default. 568 F.2d at 351.
Where a default is caused “by a flood or some other unin-
sured catastrophe,” a defendant’s false certifications cannot
be said to have caused the government’s loss. Id. This focus
seems sound to us. To ensure that the false certifications were
a substantial factor in bringing about HUD’s losses and that
the losses were foreseeable to the defendant, the plaintiff must
No. 22-1553                                                   19

show that the false certifications played some role in causing
or increasing the risk of a subsequent default.
    The parties dispute how Calderon might meet that bur-
den. Calderon argues that she should be allowed to extrapo-
late causation from a generalized statistical analysis of Car-
rington’s federally insured loans. Carrington responds that
Calderon had to proceed loan-by-loan through the 349 loans
and show how each allegedly false statement caused each
loan’s default. But because we find that Calderon did not
meet her burden under either method, we do not resolve
which method was appropriate.
    We consider the statistical method first. Calderon claims
to have offered proof of causation in the form approved in
United States v. Hodge, 933 F.3d 468 (5th Cir. 2019). There the
Fifth Circuit found sufficient evidence to support a jury ver-
dict against the defendant where the government showed
that the defendant maintained a culture of “reckless under-
writing” and that this culture resulted in elevated default
rates for its federally insured loans when contrasted with the
national default rate for such loans. Id. at 475–76. Calderon
and Carrington dispute whether Calderon has provided suf-
ficient proof of reckless underwriting practices at Carrington.
But Calderon can avail herself of this method of proof only if
she proffers evidence on which a trier of fact could rely to find
that Carrington had an elevated default rate.
    To support this fact, Calderon points us to Carrington’s
2014 annual financial report, where it disclosed a total fore-
closure rate of 10.59 percent. That rate is 500 percent higher
than the national foreclosure rate of 2.15 percent, and so it
might seem to be a strong support for her position. But the
problem is that the report provides little information about
20                                                 No. 22-1553

the performance of Carrington’s federally insured loans. Cal-
deron needed to identify the total number of federally insured
loans that Carrington serviced, determine Carrington’s de-
fault rate for those loans, and then compare that to the na-
tional default rate of federally insured loans. Having failed to
do that, Calderon’s attempted statistical analysis falls short.
Without some evidence that Carrington had a higher-than-
average default rate for its federally insured loans, a jury
could not find that Carrington’s underwriting practices, reck-
less or not, had any effect on subsequent loan performance.
    Turning to the loan-by-loan method, Calderon proffers
her analysis of the 349 reviewed loans, in combination with
Carrington’s documented reason for each loan default. The
reason for default is recorded in code form. Calderon asserts
that the codes, which identified problems such as “Excessive
Obligations,” were plain-English descriptions that were ac-
cessible to any jury. Perhaps so, but that was not the problem
with them. The sticking point is vagueness: the codes do not
contain any information that would permit a reasonable fact-
finder to determine the cause of default. For example, as Car-
rington argues, a code such as “Curtailment of Income”
would not explain whether the default was caused by a false
statement regarding income in the borrower’s file or by recent
unemployment.
   Calderon proffered no expert who could interpret the
codes, explain common causes of defaults, or discuss the de-
faults in the reviewed loans. Nor has Calderon herself under-
taken the kind of analysis of the loan servicing records that
would permit her to opine to the jurors about the events that
caused a “Curtailment of Income” and whether those events
were related to the initial false statement. While the district
No. 22-1553                                                   21

court agreed to let Calderon testify about the underwriting
errors that led in her experience to defaults, she has not shown
how that experience-based testimony would help a jury. For
example, Calderon’s re-underwrite of Borrower 14’s loan file
revealed an inflated income and a default code of “Curtail-
ment of Income.” But a lay factfinder reviewing the loan file
would find no evidence that would allow her to identify
whether the reported income was spot on, too high, or too
low. Pay stubs in the file revealed what a reasonable person
might calculate as $7,801.40 in monthly income; the total in-
come reported by Carrington was $7,659. Calderon’s re-un-
derwrite provides scant guidance on how to assess or recreate
her findings. Further, that same lay factfinder would have no
information about what “Curtailment of Income” meant for
Borrower 14 and why that borrower stopped being able to
make their monthly payments. The inference that Calderon is
asking the jury to draw as to causation in loan files like this
one is speculative and impermissible.
    Other courts have noted that misrepresentations about a
borrower’s income, debt, and assets foreseeably increase the
risk of default by their very nature. See, e.g., United States v.
Spicer, 57 F.3d 1152, 1159 (D.C. Cir. 1995) (holding that the de-
fendant’s intentional misrepresentations about the size of bor-
rower down payments foreseeably caused HUD’s losses
when the loans defaulted, even where there was limited evi-
dence to explain each default and even though other factors
might have played a role). But we are reluctant to extend that
reasoning to this case. On the present record, it is not clear
how a factfinder would even spot the alleged false statement
in each loan file, let alone evaluate its seriousness and scope.
And though Calderon asserts that the misrepresentations in
this case are of the type identified in Spicer, we do not see
22                                                No. 22-1553

much in the record to support that point other than Calde-
ron’s assertions. Without more evidence from which a jury
could conclude that Carrington’s alleged misrepresentations
in each loan caused the subsequent defaults, the nature of
those misrepresentations is not enough to get past summary
judgment.
                              IV
    Because Calderon did not proﬀer evidence that would
permit a reasonable trier of fact to ﬁnd that Carrington’s vio-
lations of the False Claims Act caused any harm to HUD, we
AFFIRM the judgment of the district court.