| NEW YORK, March 7
NEW YORK, March 7 Bank of America NA
prevented homeowners from receiving mortgage-loan
modifications under a federal program in order to avoid millions
of dollars in losses while benefitting from financial incentives
for participating in the program, according to a complaint
unsealed in federal court Wednesday.
The suit is the second whistleblower complaint unsealed so
far with apparent ties to the $1 billion False Claims Act
settlement announced by Bank of America and the U.S. Attorney's
Office for the Eastern District of New York on February 9.
The Bank of America settlement is also part of the sweeping
$25 billion agreement reached between state and federal
Final settlement documents have yet to be filed in the BoA
settlement, which the U.S. Attorney's Office said was the
largest ever False Claims Act payout related to mortgage fraud.
The settlement resolved claims that Bank of America's
Countywide Financial subsidiaries defrauded the Federal Housing
Administration by inflating appraisals used for
government-insured home loans, as well as claims involving the
Home Affordable Modification Program, a federal program to help
American homeowners facing foreclosure.
The complaint unsealed Wednesday was filed by whistleblower
Gregory Mackler, a Colorado resident who said he worked
alongside Bank of America executives while an employee at Urban
Lending Solutions, a company to which Bank of America contracted
some of its HAMP work.
While working at Urban Lending, Mackler said he saw BofA and
its loan servicing subsidiary, BAC Homes Loans Servicing LP,
implement "business practices designed to intentionally prevent
scores of eligible homeowners from becoming eligible or staying
eligible for permanent HAMP modification."
The bank and its agents routinely pretended to have lost
homeowners' documents, failed to credit payments during trial
modifications and intentionally misled homeowners about their
eligibility for the program, the complaint alleged.
BoA let through just enough HAMP modifications to avert
suspicion and allay congressional critics, while not enough to
incur any substantial losses to its own bottom line, according
to the complaint.
"In other words, BoA has had it both ways. BoA has continued
to maximize the value of its mortgage portfolio with anti-HAMP
modification practices and managed to make money by committing
fraud on homeowner," the lawsuit said.
A lawyer for Mackler could neither confirm nor deny that the
complaint was tied to the settlement. A spokesman for the U.S.
attorney's office and a representative for Bank of America
declined to comment.
In February, a whistleblower complaint was unsealed from
Kyle Lagow, a former employee in a Countrywide appraisal unit
which detailed allegations of Countrywide's "corrupt
underwriting and appraisal process." Bank of America purchased
Countywide in June 2008.
Under the False Claims Act, successful whistleblower
complaints can earn that whistleblower up to 25 percent of the
According to the docket, the U.S. Department of Justice has
until March 16 to decide whether to intervene in both the
Mackler and Lagow case.
The case is United States of America v. Bank of America NA et
al., in the U.S. District Court for the Eastern District of New
York, no. 11-3270.