About the Author
Brian Mahany and his firm Mahany & Ertl represent mortgage company employees who have been denied commissions or reimbursement and also represent whistleblowers in claims brought on behalf of the U.S. government. Presently they are partnered with HUD in the largest federal false claims act case in the nation against a mortgage company – the government’s $2.4 billion claim against Allied Home Mortgage. Brian welcomes inquiries at (414) 704-6731 (direct) or by email at firstname.lastname@example.org.
Whistleblowers are the new American heroes. Most fraudsters get caught because someone gets fed up and turns them in. Some people are motivated by the large cash awards paid by the government, others want revenge (jilted lovers and workers who were poorly treated are always good sources of tips) and some simply want to do the right thing… like Victor Bibby and Brian Donnelly.
Bibby and Donnelly are officers of Veterans Mortgage Company in Georgia, a company that specializes in originating loans for veterans. The two men helped many vets and active duty military personnel obtain Interest Rate Reduction Refinancing Loans or “IRRRLs.”
VA regulations prohibit vets and military personnel from being charged attorney’s fees or closing costs on IRRRL loans. Title exam fees are allowed, however.
Bibby and Donnelly got suspicious when they saw lenders charge title fees of $500 to $900 to service members on IRRRL loans. The average title exam is just $150. Lenders are required to certify on each loan backed by the VA that it has not charged excessive fees or fees not authorized by law.The men claim that many lenders were violating the law.
Ultimately the two men brought a whistleblower suit under the federal false claims act in an Atlanta federal court. Named in the complaint were many of the nation’s biggest lenders including Wells Fargo, Washington Mutual, Chase Manhattan Mortgage, Citimortgage, General Motors Acceptance Corporation, Countrywide, Bank of America, US Bank, Fifth Third Bancorp plus a dozen smaller lenders. The case was filed in March of 2006. The complaint remained under seal until October of last year when the government finally intervened.
JP Morgan Chase settled its portion of the suit last month with the government for $45 million. Bibby, Donnelly and their lawyers will receive approximately 1/4 of that amount of $11.7 million.
The mortgage crisis has brought several whistleblowers forward. There are many other frauds that haven’t been uncovered, however. The largest false claims suit in the industry is a $2.4 billion claim brought by our law firm against Allied Home Mortgage and founder Jim Hodge.
If you have non-public information about wrongful lending practices, give us a call. The False Claims Act requires there be some fraud and injury to the U.S. government and taxpayers. Because many mortgage are federally insured, most mortgage frauds qualify.