Category Archives: Mortgage Fraud

Mortgage and Housing Fraud Recoveries Total Over $3 Billion for 2014

dept_justiceIn fiscal year 2014, the Justice Department obtained roughly $3.1 billion in recoveries stemming from the housing and mortgage fraud claims, the most ever recovered in a fiscal year for that sector. The government has now recovered $4.65 billion over the last five years from financial institutions whose misconduct contributed to housing and mortgage crisis.

Below are the top four housing and mortgage fraud claims settled in 2014:

  • Bank of America – $1.85 Billion: BofA acknowledged that it submitted false claims to Freddie Mac, Fannie Mae and the Federal Housing Administration (FHA) in connection with the underwriting, origination and quality control of residential mortgages. The $1.85 billion was just another part of the settlement that included a $5 billion fine under the Financial Institutions Reform, Recovery and Enforcement Act (FIRREA) and $7 billion in relief for BofA consumers who lost their homes due to the alleged fraud. BofA’s global resolution was worth $16.65 billion total.
  • JPMorgan Chase – $614 Million: JPMC allegedly submitted false claims through the origination and underwriting of non-compliant mortgages that were submitted for insurance coverage through the Department of Housing and Urban Development (HUD), the FHA and the Department of Veterans Affairs (VA). These non-compliant mortgages led to substantial losses for the FHA and VA.
  • SunTrust – $418 Million: Between 2006 and 2012, SunTrust allegedly originated and underwrote non-compliant mortgages to be insured by the FHA. It also failed to use effective quality control measures to identify non-compliant mortgages, and failed to report the non-compliant loans the company did identify to FHA. SunTrust also paid out $500 million in relief to consumers, $40 million to state governments and $10 million to the federal government in addition to the $418 million to settle civil mortgage fraud charges, bringing the total paid under the settlement to $968 million.
  • U.S. Bank – $200 Million: Between 2006 and 2011, U.S. Bank effectively ignored lending requirements by originating and underwriting mortgages that didn’t meet FHA requirements. U.S. Bank acknowledged that its conduct caused the FHA to insure thousands of bad loans that later resulted in substantial losses.

The financial sector of the nation’s economy continues to be a hotbed for misconduct and fraud. Now more than ever the government is relying on whistleblowers to expose any wrongdoing by financial institutions. In a successful case, a whistleblower is eligible to receive a share of any recoveries as well as the gratitude of the nation for helping save taxpayer dollars.

J.P. Morgan Whistleblower to Receive $63.9 Million

jpmorgan-logoThe Justice Department’s case against JPMorgan Chase & Co. formally came to a close last week with the announcement that whistleblower Keith Edwards will receive a reward of $63.9 million. Edwards worked for JPMorgan or its predecessors between 2003 and 2008 as an assistant vice president supervising a government insuring unit. He provided valuable tips to the U.S. Justice Department, which in turn led to the $614 million settlement between JPMorgan and the government which was announced on February 4. The settlement resolves charges that J.P. Morgan defrauded the government into insuring bad home loans.

JPMorgan admitted in the settlement that for over 10 years, the company had submitted thousands of mortgages for insurance through the Federal Housing Administration (FHA) or the Department of Veterans Affairs (VA) that were not eligible to receive government guarantees. JPMorgan also admitted in the settlement that the company did not tell either of the government agencies about internal reviews that had unearthed problems with mortgages that inevitably went sour, leaving the government to cover millions of dollars in losses at a time when thousands across the country were losing their homes through eviction and foreclosure.

Edwards initially filed suit against his former employer in 2013 under the False Claims Act. The Justice Department joined his lawsuit, and with the announcement of his reward, the case has formally come to a close. According to Reuters, roughly $56.5 million of Edwards’ whistleblower reward comes from the FHA portion of the case, and $7.4 million comes from the VA portion.

The case is U.S. ex rel. Edwards v. JPMorgan Chase Bank NA et al, U.S. District Court, Southern District of New York, No. 12-00220.