Mortgage firm in line for $8.5M whistleblower payout in Bank of America settlement

James Marchese

March 1, 2021

James Marchese America settlement

A New Jersey-based mortgage company will receive an $8.5 million whistleblower payout as part of an investigation into Bank of America’s practices by the U.S. attorney’s office in Charlotte, a lawyer in the case told the Observer Friday.

Mortgage Now filed one of four whistleblower lawsuits that were rolled into the $16.65 billion settlement that the Charlotte bank reached with the U.S. Justice Department in August over the bank’s packaging of mortgage loans into securities, according to court and settlement documents.

Mortgage Now’s complaint was unsealed by a federal judge in August, but the amount of the payout wasn’t known until Friday. Unsealed court documents and media reports this week have revealed details about the other three settlements, which total more than $160 million.

The U.S. Attorney’s Office for the Western District of North Carolina, according to Bank of America settlement documents, investigated claims by Mortgage Now that the Charlotte bank and predecessor Countrywide Financial submitted reimbursement claims to the Federal Housing Administration for amounts they had already received from third-party lenders.The False Claims Act allows whistleblowers to assert fraud claims on behalf of the U.S. government. In return, whistleblowers can receive a percentage of the overall settlements.

Clifford “Kip” Marshall, an Asheville attorney representing Mortgage Now, said his client is receiving 17 percent of the $50 million settlement the government reached on the claims brought by the lender.

Mortgage Now filed its suit in federal court in Asheville in 2012, but Marshall said he didn’t get an indication that it would be included in the Bank of America settlement until early this year. He worked with two lawyers in New York, Roland Riggs and Brad Friedman of Milberg LLP, on the case.

According to a filing in August, the U.S. government joined only one portion of the lawsuit filed by Mortgage Now.

In that part of the suit, Mortgage Now alleged that starting in 2008 Countrywide and later Bank of America “double-dipped” on claims submitted to the government on soured loans insured by the FHA. The suit alleges the bank submitted the claims after it had already been compensated by third-party lenders that had originally made the loans and then sold them to the bank.

“This matter has been fully resolved,” said Lawrence Grayson, a spokesman for Bank of America, declining to comment further.