Fifth Third Bank must pay $85 million in mortgage fraud settlement
This is a wcpo.com article.
Second major fraud claim in seven days.
CINCINNATI – For the second time in seven days, the Justice Department announced Fifth Third Bank has to pay millions to settle a civil fraud claim.
The Cincinnati-based bank must pay $85 million because it failed to timely report defective mortgage loans to the FHA. Fifth Third knew more than 1,400 loans that it certified did not qualify for federal insurance, the U.S. Attorney in Manhattan announced Tuesday.
And Fifth Third might have to pay millions more.
The settlement reimburses HUD for paying insurance claims on about 500 loans that defaulted. Fifth Third also agreed to pay for any losses HUD may incur on approximately 900 defective loans that have not yet defaulted.
Two whistleblowers, John Ferguson and George Mann, will receive $6.37 million in the deal, according to Reuters.
Fifth Third discovered the defects in post-closing reviews between 2003 and 2013 but did not report them until 2012 and 2014, according to Manhattan U.S. Attorney Preet Bharara. They were required to report them within 60 days.
“When banks discover that some of the loans are lemons and that their promises of quality were false, as Fifth Third Bank did, they must come forward and report it promptly, so that taxpayers don’t get stuck with the bill,” Bharara said.
Fifth Third has reformed its business practices and fired the employees responsible, Bharara said.
Last week, Fifth Third said it would pay $18 million to settle allegations it discriminated against black and Hispanic consumers by charging some higher interest rates on auto loans.
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