FHA Claims Against Bank of America / Countrywide Resolved
Loretta E. Lynch, U.S. Attorney forrnthe Eastern District of New York announced the settlement of claims her officernhad brought against Bank of America, Countrywide Financial Corporations andrnsome of its affiliates for underwriting and origination mortgage fraud. The settlement ends an inquiry into whetherrnCountrywide, acquired by Bank of Boston in 2008, had knowingly made loans insuredrnby FHA to unqualified home buyers. </p
Thernsettlement, in the amount of $1 billion requires an immediate payment of $500rnmillion to correct some of the harm done to FHA by Countrywide’s conduct. The remaining $500 million will be deferredrnto fund a loan modification program for borrowers across the nation with Countrywidernmortgages that are under water. If, after the expiration of three years, the bank has not appliedrnthe full $500 million to provide such relief, any remainder will be paidrndirectly to the United States.</p
According to the announcement,rnthis is the largest ever False Claims Act settlement relating to mortgagernfraud. In addition to lending tornunqualified borrowers the allegations against Countrywide included claims thatrnthey had originated loans based upon inflated appraisals.</p
The settlement was announced “asrnpart of the global resolution between the United States of America and the fivernlargest mortgage servicing banks in the country,” but it is unclear whether thern$1 billion to be paid by Bank of America is part of the $25 billion masterrnsettlement or an addition to that amount.
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