For the third time in less than a year, the Justice Department has busted out the Civil War-era False Claims Act to sue a major bank for fraud in connection with the mortgage crisis.
A federal district court judge in California has refused to dismiss claims that more than two dozen current and former Wells Fargo directors and the bank’s CEO and former CFO breached their fiduciary duties to shareholders in the course of navigating the mortgage crisis.
Bank of America has agreed to pay $1 billion to settle an investigation into alleged underwriting and mortgage fraud by Countrywide Financial, federal prosecutors announced Thursday. The deal marks the government’s first major success using the False Claims Act to tackle the mortgage crisis.
In his latest broadside against the banking industry, New York Attorney General Eric Schneiderman is alleging that the nation’s largest banks use the Mortgage Electronic Registration System to evade public filings, shortchange localities of $2 billion in fees and compromise homeowners’ interests. A complaint filed on Friday describes MERS, a Virginia-based digital mortgage tracking service, as “a shell company” established as a stealth mortgagee for banks, particularly JPMorgan Chase, Bank of America and Wells Fargo.
The SEC brought civil fraud charges today against six former top executives at Fannie Mae and Freddie Mac, saying they misled investors about risky subprime loans held by the mortgage giants. The agencies’ two former CEOs are the highest-profile individuals to be charged in connection with the 2008 financial crisis.