BANK OF AMERICA ACCUSED OF MORTGAGE FRAUD IN QUI TAM SUIT

Just weeks after being found liable for violations of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (“FIRREA”), Bank of America, Corp. (“BofA”) is again facing allegations of mortgage related fraud.  This time the lawsuit asserts that BofA defrauded the federal government and multitudes of borrowers by gaming the Home Affordable Refinance Program (“HARP”).  The Federal Housing Finance Agency (“FHFA”) established HARP in March of 2009 to help alleviate the troubles created by plummeting property values after the burst of the U.S. housing bubble in 2006.

Specifically, HARP facilitates refinancing for underwater homeowners, who are otherwise current on their payments, by offering favorable interest rates and refinancing without mortgage insurance.  In order to participate in HARP, an underwater homeowner’s mortgage must be owned or guaranteed by federally-backed Fannie Mae or Freddie Mac.  To further encourage refinancing, the FHFA substantially reduced loan level price adjustments (“LLPAs”), common risk-based fees, for HARP loans purchased by Fannie and Freddie.  The removal of LLPAs was designed as a cost reduction for lenders, who would in turn pass the savings on to borrowers.

However, one such homeowner, John J. Platz, alleges in his qui tam complaint filed under the False Claims Act that BofA profited illegally by first, pushing the FHFA to drop LLPAs, but then failing to pass along savings to consumers.  Platz contends that this violated the terms and conditions of payment for lenders under HARP and resulted in the submission of thousands of false claims to the federal government.

Young Law Group is a nationwide leader in whistleblower representation and has successfully represented numerous clients in some of the nation’s largest qui tam cases for over a decade.  For a free confidential consultation, please call Eric L. Young, Esquire at (800) 590-4116 or complete the online form here.