Will banks face a growing number of False Claims Act lawsuits based on government-backed mortgages in default?

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Will banks face a growing number of False Claims Act lawsuits based on government-backed mortgages in default?

Will banks face a growing number of False Claims Act lawsuits based on government-backed mortgages in default?

Lexology-

The legal aid group Advocates for Basic Legal Equality (ABLE) has taken a novel approach to using the False Claims Act by initiating a lawsuit against U.S. Bank. The case claims that U.S. Bank collected payments from the Federal Housing Administration (FHA) for FHA-backed loans deemed to be in default, rather than meeting its obligations to work out options with the borrowers.

ABLE relied on the information it obtained from customers and borrowers of U.S. Bank in bringing its suit. Borrowers, such as Mr. Hayward Ferrell, obtained mortgages from U.S. Bank guaranteed by the FHA. If a borrower defaults on an FHA loan, the government agency makes payments to the loan-issuing bank to make the bank whole. The FHA requires, however, that these banks make an effort to work with their borrowers to mitigate loss — so the government can limit expenditures on these loans.

In this lawsuit, ABLE has taken the position that U.S. Bank failed to take the necessary steps to work with borrowers like Mr. Ferrell to prevent them from defaulting on their mortgages. Instead, the group claims that the bank defaulted Mr. Ferrell and other borrowers between 2001 and 2011 so that it could make false claims for payment to FHA, receiving at least $2.37 billion in payments on these claims.

[LEXOLOGY]

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3 Responses to “Will banks face a growing number of False Claims Act lawsuits based on government-backed mortgages in default?”

  1. crittermom says:

    YES! Finally the actual people who were harmed will be heard.
    Way to go ABLE!

    “Novel” approach?
    I think it’s a basic, common sense approach. It’s the TRUTH.

    They nailed it. The banks (servicers), did everything in their power to avoid a work-out with the borrowers, with proof after proof of that, so they did NOT meet their obligation & only did it to obtain that Fed money.
    Everyone except the govt acknowledges that fact. Duh?

    When ABLE takes on Chase, I’ll gladly stand behind them. I’ll be watching this with great interest, & hope.

    Too bad the DOJ won’t step in to help with the case.

    Shame on the govt for not backing this.
    But wait! If they did, they’d probably settle for a slap on the wrist, & more meaningless fines which those actually harmed never receive.

    Go it alone, ABLE. You’re better off without govt support. They’d just sell out in any settlement.
    THAT’S been proven, too.

    It’s been a viscous circle of the banks doing illegal activities, & the govt stepping in to impose fines the govt then keeps.
    The banks do it again, & it’s the same scenario.
    Those harmed never see restitution. We’re left out of the loop.

    Let the people be heard!

  2. al says:

    hey!!! i have years on this !! finally someone noticed.
    but is not us bank, it is a company called Midfirst bank who en real world is a garbage company named Midland mortgage co, in our case they have been collecting FHA INSURANCE and avoiding at any cost working with home owners, just google this scum bags and you will find nothing but bad things about them . they are a fraudulent document factory and use the help of douglas c zahm in florida who also fabricates every single paper in courts …

    a big business for them ……

  3. Dee says:

    I am also having problems with this company. They have really taken me for granted. My mortgage loan is so messed up. I was one month behind and wanted to defere my payment. I was told In order to get assistsnce, i needed to be 3 months behind. I did not want to get that far behind. I was going to be a month behind every month if that payment was not deferred. Long story short on only had a 15 year loan and ended up with a 40 yr loan. I was put on a repayment plan And That I had to make my regular mortgage payment plus the payments they encourage me to get behind on. I faithfully did that and at the end of the term I had to pay a whopping lump sum of where in the world did that come from? Now I’m only making less than $100 toward my principle every month. I need serious legal help. ASAP

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