Tuesday, November 20, 2012

Six banks have paid $162 million to settle whistleblower lawsuit alleging hidden fees charged on veterans’ loans

Five more banks and mortgage companies have agreed to pay the federal government a total of $116.7 million to settle a whistleblower lawsuit that alleged the banks illegally charged veterans hidden fees on refinanced home loans backed by the Veterans Administration.

The latest settlements bring the total amount recovered so far from the whistleblower lawsuit to $162 million.

The mortgage lenders that settled the whistleblower lawsuit and the amounts they paid are: Countrywide Home Loans Inc. ($45 million), PNC Bank ($38 million), First Tennessee Bank ($16 million), SunTrust Mortgage ($10.2 million) and CitiMortgage ($7.5 million).

In March, JPMorgan Chase agreed to pay $45 million to settle similar claims against it.

The whistleblower lawsuit, which is being litigated by three private law firms on behalf of the federal government, will proceed against Wells Fargo and Mortgage Investors Corporation ("MIC"). A federal district court in Atlanta on Nov. 19 rejected motions by Wells Fargo and Mortgage Investors Corp. to dismiss the “qui tam” lawsuit.

The lawsuit was filed in 2006 in federal district court in Atlanta, Georgia, by Victor Bibby and Brian Donnelly. The lawsuit was brought under the federal False Claims Act, which allows whistleblowers to sue companies that are defrauding the government and collect recoveries on the government’s behalf.