Justice Department and Bank of America Agree to $17 Billion Mortgage Fraud Settlement
Bank of America agreed to a mortgage fraud settlement on mortgage fraud charges brought by the US Department of Justice for $17 billion, a historic settlement amount against a large bank.
The mortgage fraud settlement resolves mortgage fraud charges stemming from Bank of America’s purchase of Merrill Lynch & Co, and Countrywide Financial Group, while they teetered on the verge of collapse during the housing crisis.
This is the largest mortgage fraud settlement between the US and a single company, and is approximately equal to the bank’s total profit for the past three years. The questionable mortgages and potential mortgage fraud involving deals through Merrill Lynch and Countrywide. The bank’s attorney argued that Bank of America was being unreasonably punished for the actions of the subsidiaries.
The US Justice Department argued that Countrywide, which was purchased by Bank of America in 2008, committed mortgage fraud by selling shoddy mortgages to Fannie Mae and Freddie Mac, triggering the housing crisis and recession. Bank of America has been ordered to pay $863.6 million for the fraud.
Other banks have faced large mortgage fraud settlements, including JPMorgan Chase & Co’s $13 billion penalty in November 2013, and CitiBank’s $7 billion penalty in March of this year.
CEO Brian Moynihan said that this mortgage fraud settlement was one of the last, which will resolve financial penalties and litigation against the companies involved in the 2007 financial crisis.
Several states could walk away with more than $1 billion each. Most of the states have directed the money to refunding public pensions that lost money on mortgage securities.
Since the start of the financial crisis, Bank of America has been ordered to pay $60 billion in fines, claims, and buy out mortgage bonds.
Mortgage Fraud in South Carolina
Mortgage fraud is the misrepresentation of information or the omission of information on a mortgage application in order to obtain a loan or obtain a higher loan offered by the lender had they known the truth.
The two main schemes used to commit mortgage fraud include “flipping properties” and inflating appraisals. While “flipping” properties is legal, it becomes illegal when a nominee or straw buyer buys the property. A nominee/straw buyer is one who buys the property for another person because the other person already has loans out on other property. If the nominee/straw buyer defaults on the mortgage, which was the case for many with the downturn of the economy, the investor may face charges of fraud for using deception to obtain the loan.
The Strom Law Firm Defends Mortgage Fraud Charges
Mortgage fraud is a serious offense with stiff penalties. If convicted of mortgage fraud, you could face upwards to 30 years in prison and harsh penalties. If you feel you are under investigation for your involvement in a mortgage fraud scheme, it is at the utmost importance that you contact a South Carolina Criminal Defense Lawyer at the Strom Law Firm, LLC today. We understand what is at stake, which is why we will fight aggressively for your name and your reputation. Contact us today for a free consultation. 803.252.4800.
