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02/10/12

$1 Billion to Be Paid by Bank of America to the United States

On February 10, 2012, the U.S government announced that it would resolve its claims against Bank of America, Countrywide Financial Corporation, and certain Countrywide affiliates for allegedly engaging in mortgage fraud. These lenders are required to pay the Federal Housing Administration (FHA) $500 million directly and another $500 million that will be used to fund a loan modification program for Countrywide borrowers who are underwater on their mortgages.

Bank of America, Countrywide, and its affiliates issued tens of thousands of FHA-insured loans to unqualified borrowers, causing borrowers and the FHA to endure hundreds of millions in damages. Of the settlement, U.S. Attorney for the Eastern District of New York Loretta Lynch said, “It also puts lenders on notice that they will face serious financial consequences for violating their obligations under the FHA’s programs.”

Inspector General Montoya believes that this decision will encourage lending institutions that have the authority to directly endorse FHA-insured mortgages adhere to FHA standards much more closely in the future.  

 

 

Read Full Stop Fraud.gov Article