(Adds OneWest comment)
NEW YORK, April 8 A lawsuit has been unsealed
accusing OneWest Bank FSB, a lender once known as IndyMac
Bancorp Inc, of causing the U.S. government to improperly pay
out $206 million under a federal program to help struggling
homeowners avoid foreclosure.
According to a so-called whistleblower complaint made public
on Tuesday, OneWest violated the 2009 Home Affordable
Modification Program (HAMP) by routinely tacking on thousands of
dollars of debt to borrowers' principal balances, without
providing required disclosures of terms such as payment amounts,
interest rates, finance charges and late payment policies.
The complaint said OneWest would "virtually always" loan new
amounts of principal, averaging $17,000 per contract, and fail
to itemize as required under the federal Truth in Lending Act,
making it impossible to tell whether the sums were proper.
As a result, the lawsuit says the government paid $206
million of incentives under HAMP to help homeowners avoid
foreclosure because of OneWest's false statements, including
$58.3 million to OneWest.
The complaint was unsealed after the U.S. Department of
Justice declined to intervene in the case.
It was filed on behalf of Michael Fisher, who according to
the complaint worked on modifications for OneWest and other
servicers at California and Texas law firms from 2008 until
2012. His lawsuit seeks triple damages under the False Claims
Act, which lets individuals sue government contractors for
allegedly defrauding taxpayers.
"We look forward to rebutting these groundless claims in
court," a OneWest spokesman said. He added that "numerous"
government agencies regularly audit the bank's loan modification
activities, and have never identified material errors.
OneWest was created in March 2009 by investors including
Paulson & Co and JC Flowers & Co, and bought many assets of
IndyMac, a mortgage lender that had failed the previous July.
Based in Pasadena, California, OneWest now has more than $24
billion of assets and 75 branches, according to its website.
Samuel Boyd, a Dallas-based lawyer for Fisher, did not
immediately respond to a request for comment.
HAMP was part of the Obama administration's effort to
address the U.S. housing crisis. Through January, more than 1.3
million borrowers had received permanent loan modifications,
according to the Treasury Department, less than half the
original goal of 3 million to 4 million.
The case is U.S. ex rel Fisher v. OneWest Bank FSB, U.S.
District Court, Southern District of New York, No. 12-09352.
(Reporting by Jonathan Stempel in New York; Editing by David
Gregorio and Lisa Shumaker)