Whistleblower Gregory Mackler of Colorado has exposed foreclosure-related abuses of Bank of America. The bank denied housing loan modifications under programme of Washington to skip losses but it gained from monetary incentives awarded to it for participating in the plan. The complaint of Mackler was unsealed in a federal court on Wednesday 7th March.
Previous to this another whistleblower’s secret had been unsealed with seeming links to the False Claims Act settlement of $1 billion that the bank had announced on 9th February with the US Attorney’s Office (Eastern District/New York). This settlement is also included in the mega Settlement involving $25 billion that has recently been reached between the banks and the governments at both state and federal levels.
The final documents in the BofA settlement have not been filed. The office of US Attorney said it was the biggest payout under False Claims Act connected with mortgage fraud.
This settlement resolved allegations regarding defrauding of FHA by Countrywide Financial (now under Bank of America) by inflating of appraisals in home loans guaranteed by the government agency. It alludes to settlement also of claims pertaining to HAMP plan that had been launched to help those threatened with foreclosure.
Mackler said that he had been working with executives of Bank of America while he was an employee with Urban Lending Solutions; BofA had contracted out some of its work related to HAMP to this firm.
Mackler had witnessed BofA and its subsidiary that dealt with mortgage servicing, BAC Homes Loans Servicing LP engage in “business practices designed to intentionally prevent scores of eligible homeowners from being eligible or staying eligible for permanent HAMP modification”.
He alleged that as a matter of routine the agents and representatives of the banks pretended that they had lost the documents of the homeowners, failed to see that the payments were credited during the time of trial modification and knowingly misled the homeowners regarding them being eligible for the rescue programme.
Bank of America allowed the minimum number of modifications under HAMP to pass through to allay suspicion and deflect criticism from the Congress. The numbers were so few that the bank did not incur any notable loss, the complaint by Mackler alleged.
It meant BofA ate the cake and had it too. It maximized its gains from the mortgage portfolio following modification programmes that were anti-HAMP while raking money by defrauding the house owners.
Photo by Shannon Clark