Bank of America to Pay Government $1 Billion Settlement – The Largest Mortgage Fraud Settlement In The History Of The False Claims Act

On February 9, 2012, the United States Attorney’s Office for the Eastern District of New York announced the largest ever False Claims Act settlement relating to mortgage fraud.  Bank of America, Countrywide Financial Corporation, and other Countrywide subsidiaries have been under investigation since 2009 and were accused of mortgage origination and underwriting fraud.  They have agreed to pay 1 billion dollars to settle the allegations.

The bank, through Countrywide, was accused of making and granting Federal Housing Administration insured loans to unqualified home buyers.  Additionally, the companies were accused of using inflated appraisals to originate mortgage loans and consequentially defrauding the FHA insurance fund.

The settlement will be split into two parts.  An immediate payment of $500 million will go directly to FHA.  The second $500 million will be used to fund a modification to Countrywide’s loan program.  This new program will help borrowers with underwater mortgages by modifying their original loans.  If, at the end of three years, the $500 million has not been entirely used by the program, the remainder will go to the Government.

One of the major reasons for the current economic and financial crisis in the United States is irresponsible and fraudulent behavior relating to the residential mortgage loan industry.    It is recoveries, such as this one, that will help to contribute to the change and upwards movement our economy so desperately needs.  Not only does this settlement get back the money that the government was allegedly defrauded into paying, it also takes major steps to help individuals who were negatively influenced by irresponsible lending practices.

To learn more about mortgage and other types of fraud and how you can help combat it, visit our website at www.fraudfighters.net.

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