The FHA/HUD official site has issued a press release announcing a major settlement in an FHA loan fraud case brought by the Obama administration. According to the press release titled, “Obama Administration Settlement With Bank of America Will Strengthen FHA Fund, Provide Billions in Consumer Relief”, a global settlement of about $17 million was reached.
According to the press release, “$1 billion of the total settlement amount resolves claims arising from allegations of fraud involving certain Federal Housing Administration (FHA)-insured single-family mortgage loans and a failure to perform under its servicing contract with the Government National Mortgage Association (Ginnie Mae). Under the terms of the settlement, Bank of America will pay $800 million to resolve the claims relating to FHA and $200 million to Ginnie Mae.”
The press release says the remaining approximately $16 billion of the settlement, “resolves fraud claims involving the pooling of residential mortgage backed securities, collateralized debt obligations, and other claims by the United States, along with the States of California, Delaware, Illinois, Maryland, New York, and the Commonwealth of Kentucky, and includes $7 billion in consumer relief with a focus on borrowers that were in the hardest-hit areas during the housing crisis.”
HUD Secretary Julian Castro is quoted in the press release, saying “”Today’s settlement with Bank of America is another important step in the Obama Administration’s efforts to provide relief to American homeowners who were hurt during the housing crisis,”
Castro adds, “This global settlement will strengthen the FHA fund and Ginnie Mae, and it will provide $7 billion in consumer relief with a focus on helping borrowers in areas that were the hardest hit during the crisis. HUD will continue working with the Department of Justice, state attorneys general, and other partners to take appropriate action to hold financial institutions accountable for their misconduct and provide consumers with the relief they need to stay in their homes. HUD remains committed to solidifying the housing recovery and creating more opportunities for Americans to succeed.”
The Department of Justice worked with the HUD Office of General Counsel, Office of Housing, and Office of the Inspector General on a fraud investigation “involving FHA-insured single-family mortgage loans that were underwritten by Bank of America during the period from May 1, 2009, to April 1, 2011. HUD also provided assistance with respect to a breach of contract claim involving Bank of America’s role as one of two master subservicers for Ginnie Mae’s portfolio of defaulted single-family mortgages.”
You can read the entire press release at http://portal.hud.gov/hudportal/HUD?src=/press/press_releases_media_advisories/2014/HUDNo_14-101.
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