New Jersey Firm in Line for Whistleblower Payout in Bank of America Settlement

CHARLOTTE, N.C. (The Charlotte Observer/TNS) -

A New Jersey-based mortgage company is in line for a whistleblower payout as part of Bank of America’s $16.65 billion settlement in August over the bank’s packaging of mortgage loans into securities, according to court and settlement documents.

The U.S. Attorney’s Office for the Western District of North Carolina in Charlotte, according to the settlement, investigated assertions by Mortgage Now that the Charlotte bank and Countrywide Financial submitted reimbursement claims to the Federal Housing Administration for amounts they had already received from third-party lenders.

The False Claims Act allows whistleblowers to assert fraud claims on behalf of the U.S. government. Bank of America bought Countrywide in 2008.

The lawsuit was unsealed in August, but no documents outlining a payout have been filed in U.S. District Court in Charlotte.

The Mortgage Now case is one of four False Claims Act cases included in the Bank of America settlement. In two of those cases, court documents and media reports indicate the whisteblowers received payouts equal to 16 percent of the $350 million settlements assigned to their claims.

In the Mortgage Now case, settlement documents say the claims involving the lender were worth $50 million, meaning Mortgage Now could be in line for $8 million.

According to a filing in August, the U.S. government only joined one portion of the lawsuit filed by Mortgage Now. In that part of the suit, Mortgage Now alleged that starting in 2008, Countrywide and later Bank of America “double-dipped” on claims submitted to the government on soured loans insured by the FHA. The suit alleges the bank submitted the claims after it had already been compensated by third-party lenders that had originally made the loans and then sold them to the bank.

“This matter has been fully resolved,” said Lawrence Grayson, a spokesman for Bank of America. An Asheville, N.C., attorney representing Mortgage Now did not return a call seeking comment.