Bank of America to Pay $3.4M Whistleblower Settlement Over Foreclosure Practices
The lawsuit alleged the bank was using rubber-stamped promissory note endorsements in violation of a consent judgment.
January 29, 2018 at 03:31 PM
4 minute read
Bank of America agreed to pay $3.4 million to the federal government to settle whistleblower claims filed by Miami attorney Bruce Jacobs.
The Jan. 5 agreement stems from allegations that the bank didn't meet documentation standards for foreclosures and bankruptcies even after agreeing to do so as part of a $25 billion consent judgment involving Bank of America and four other mortgage servicers.
“Instead of intending to comply with the servicing standards for foreclosures as provided in the … consent judgment, the defendants intended to commit new misconduct by presenting misleading and deceptive documentation in foreclosure actions promptly after April 4, 2012, and they have done so regularly since then,” the Jacobs Keeley attorney's complaint alleged.
Bank of America declined to comment on the agreement or the underlying complaint. The settlement contains no an admission of wrongdoing or liability.
Jacobs, who has made it his mission to hold mortgage lenders' feet to the fire for alleged foreclosure abuse, filed the False Claims Act lawsuit after a close examination of his own mortgage documents.
The attorney said he looked at a copy of a promissory note included in the foreclosure complaint he faced in 2012 and found what appeared to be an endorsement from the original lender to Countrywide Home Loans Inc.
There was an endorsement with no specific endorsee from Countrywide, a mortgage lender purchased when it was failing in 2008 by Bank of America. The bank was on the hook for $1.3 billion in civil penalties when Countrywide was prosecuted for selling bad loans to Fannie Mae and Freddie Mac.
Jacobs alleged the signatures didn't line up with a copy of the promissory note he requested from Countrywide back in 2008, which had no endorsements, according to the whistleblower lawsuit. One signature was from a person who left Countrywide in 2006, Jacobs claimed.
The attorney said he uncovered a “practice of misleadingly filing copies of promissory notes bearing rubber-stamped endorsement signatures that were not legally authorized by the purported signatories” even though its $2.4 billion portion of the 2012 consent judgment barred the bank from using anything other than “competent” evidence in foreclosure cases.
Bank of America used the foreclosures involving allegedly rubber-stamped endorsements to seek Federal Housing Administration mortgage insurance benefits, Jacobs claimed.
“Defendants deny specifically that they pursued foreclosures in reliance on unauthorized rubber-stamped endorsements,” the bank said in its answer to the complaint. “Defendants further deny that erroneous allegations of this supposed conduct were not publicly disclosed.”
The bank also argued Jacobs was trying to relitigate foreclosure proceedings that ended long ago.
“Defendants' standing to foreclose on the mortgages was settled as a legal matter at the time of the foreclosure action when the homeowners in the underlying foreclosure actions either did not contest defendants' standing at the time of foreclosure or unsuccessfully did so,” the bank argued.
The federal government declined to intervene in the case in 2016 but reentered the case this month to sign off on the settlement reached in October. Trial was set to begin trial Feb. 5 before U.S. District Judge Ursula Ungaro in Miami.
Jacobs said he and his attorneys could not comment on the case. Attorneys for Jacobs, the relator, were Jacobs' law partner Court Keeley, Lilly Ann Sanchez of The LS Law Firm in Miami and Benedict Kuehne of the Law Offices of Benedict P. Kuehne in Miami. Assistant U.S. Attorney James Weinkle represented the government.
Ungaro approved attorney fees of $1.5 million for the Jacobs Keeley firm, plus $100,000 in costs.
Bank of America was represented by WilmerHale attorneys Matthew Martens in Washington and Andrea Robinson in Boston and Christine Manzo of Liebler, Gonzalez & Portuondo in Miami.
Case: United States of America, ex. rel., Bruce Jacobs v. Bank of America et al
Case No.: 1:15-cv-24585-UU
Description: False Claims Act
Filing date: Dec. 14, 2015
Settlement date: Jan. 5, 2018
Judge: U.S. District Judge Ursula Ungaro
Plaintiffs attorneys: Assistant U.S. Attorney James Weinkle, Miami; Bruce Jacobs and Court Keeley, Jacobs Keeley, Miami; Lilly Ann Sanchez, The LS Law Firm, Miami; Benedict Kuehne, the Law Offices of Benedict P. Kuehne, Miami
Defense attorneys: Matthew Martens, Washington, Andrea Robinson, Boston, WilmerHale; Christine Manzo, Liebler, Gonzalez & Portuondo, Miami
Settlement amount: $3.4 million
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