Six banks will settle mortgage fraud lawsuit for $162 million


A group of six banks that includes Georgia-based SunTrust Mortgage will pay a total of $161.7 million to settle allegations that they illegally charged veterans hidden fees on refinanced home loans backed by the Veterans Administration.

The banks that agreed to settle the whistleblower lawsuit include Countrywide Home Loans ($45 million), PNC Bank ($38 million), First Tennessee Bank ($16 million), SunTrust Mortgage ($10.2 million), and CitiMortgage ($7.5 million). JP Morgan Chase agreed in March to pay $45 million to settle the mortgage claims.

The banks had tried to have the lawsuit dismissed, but U.S. District Court Judge Amy Totenberg said Monday she would allow the suit to proceed.

That settlement by the six banks means that the federal trial will proceed in Atlanta against Wells Fargo and Mortgage Investors Corporation (“MIC”).

“We look forward to trying the case against Wells Fargo and Mortgage Investors,” said Columbus attorney Jim Butler of Butler Wooten & Fryhofer. “Those two are by far the biggest defendants – they have 70 percent of the damages exposure of the eight defendants.”

The whistleblower lawsuit, which was filed in 2006, alleges that the banks cheated military veterans by hiding illegal fees in veterans’ home mortgage refinancing transactions and then trying to collect on government loan guarantees when the loans went into default. Any VA guarantees for those loans are void because unallowable fees were charged.

© 2012 by The Georgia Report


Tags: Amy Totenberg , Jim Butler , mortgage fraud , U.S. District Court , veterans