Pres Obama’s choice for Attorney General Loretta Lynch headed $26 billion mortgage scandal settlement

President Obama’s new choice for Attorney General of the United States Loretta Lynch headed the team investigating five large mortgage lenders that settled for $26 billion this year. She is the U.S. Attorney for the Eastern District of New York. She is known to be relentless, tough but fair.

The case involved a three year investigation which alleged that Countrywide Mortgage submitted false claims by knowingly making loans insured by the Federal Housing Administration to unqualified buyers. The second allegation relates to Countrywide’s alleged practice of originating FHA-insured loans based on inflated appraisals. Even though neither Countrywide nor Bank of America would be considered “government contractors,” their lending practices were alleged to violate the False Claims Act.

The $1 billion settlement represents the largest-ever False Claims Act recovery relating to mortgage fraud. Half of the recovery will be used to compensate losses sustained by the FHA. The second half of the recovery is being deferred and will be used to fund a loan modification program for Countrywide borrowers.

Jeffrey Newman represents whistleblowers