Mortgage Firms Accused of Defrauding Taxpayers

According to a report in the Huffington Post, recent confidential federal audits accuse the nation’s five largest mortgage companies of defrauding taxpayers in their handling of foreclosures on homes purchased with government-backed loans.  Five separate investigations conducted by the Department of Housing and Urban Development’s inspector general examined Bank of America, JP Morgan Chase, Wells Fargo, Citigroup and Ally Financial.  Collectively, these mortgage firms service 3 of every 5 home loans in the country.

The audits conclude that the banks presented the Federal Housing Administration with false claims by filing for federal reimbursement on foreclosed homes that sold for less than the outstanding loan balance using defective and faulty documents, according to the Huffington Post.  Federal and state employees plan to use the results of these audits in negotiations with the five lenders to settle allegations of illegal foreclosures and other shoddy practices.  Some seek payment to create a fund of $5 billion to help distressed borrowers and settle the allegations.  Others seek a fund of as much as $30 billion, with additional costs to be incurred for improving the banks’ internal operations and modifying troubled borrowers’ home loans.

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