$1 Billion To Be Paid By Bank Of America For Mortgage Fraud

This post was written by jd on February 29, 2012
Posted Under: Real Estate
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Largest False Claims Act Settlement Relating to Mortgage Fraud 

As part of the global resolution between the United States of America and the five largest mortgage servicing banks in the country, which will bring much needed relief to financially distressed homeowners nationwide, Loretta E. Lynch, United States Attorney for the Eastern District of New York, today announced that the government will also resolve its claims against the Bank of America, Countrywide Financial Corporation and certain Countrywide subsidiaries and affiliates (Countrywide) for underwriting and origination mortgage fraud.

As part of the global settlement, Bank of America will pay $1 billion to resolve the wrongdoing uncovered during the office’s investigation. The settlement will entail an immediate payment of $500 million to provide a recovery for the harm done to the FHA by Countrywide’s conduct. Payment of the second $500 million will be deferred to fund a loan modification program for Countrywide borrowers across the nation with underwater mortgages. Under the terms of the program, Bank of America will solicit all potentially eligible borrowers and provide a loan modification to anyone with an eligible mortgage who accepts the offer. If, after the expiration of three years, the bank has not met its obligation to apply the full $500 million to provide such relief, any remainder will be paid directly to the United States.

“We announce today the largest ever False Claims Act settlement relating to mortgage fraud. Through their underwriting and origination of tens of thousands of government-insured loans to unqualified borrowers, Countrywide Financial subsidiaries systematically abused the Federal Housing Administration and became some of the main players in this country’s financial crisis. We are committed to protecting the FHA’s ability to provide assistance to qualified low-income and first-time home-buyers, and this settlement goes a long way toward that end. It also puts lenders on notice that they will face serious financial consequences for violating their obligations under the FHA’s programs,” stated United States Attorney Lynch.

“This agreement is demonstrative, and should serve as a model, of what results can be achieved when agencies of the United States Government join forces in a united effort to combat fraud in the FHA insured mortgage program,” said Inspector General Montoya. “OIG staff served IG subpoenas, conducted multiple interviews, reviewed loan files, and worked closely with the U.S. Attorney’s office in developing this case.” He further added, “I am appreciative of the tenacity with which the Assistant United States Attorneys approached this matter, the expertise and effort of my OIG auditors, investigators and legal team, and the assistance of the HUD Office of General Counsel and its Office of Program Enforcement and Philadelphia Home Ownership Center throughout this endeavor.”

Source: The United States Attorney General

For more information about the task force visit: www.stopfraud.gov.



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