Bank of America has agreed to pay $5 million to settle a massive whistle blower case, alleging improper foreclosure practices against the federal government.

In addition to the whistle blower case being resolved, the settlement will also dismiss a joint stipulation. By agreeing to pay the settlement, Bank of America admits to no wrongdoing, but representatives state the bank is eager to resolve the litigation.

According to the whistle blower case, Bank of America’s foreclosure policies came under fire in 2011 when an investigation was conducted by the U.S. Department of Housing and Urban Development’s inspector general. During this investigation, numerous alleged violations of state and federal law were discovered and brought to the attention of the federal government.

According to the whistle blower case, the bank used automated systems to sign affidavits for foreclosure proceedings and other illegal business practices for loan modification offerings.

Overview of Whistle Blower Case

These practices were reportedly discovered by whistle blower Bruce J., who filed a qui tam lawsuit based on evidence of fraudulent claims against the government. Bruce reportedly discovered these illegal foreclosure practices when defending his own home from foreclosure, and he states the bank entered this settlement without any intention of changing its business practices.

Bruce asked the federal government’s involvement to help “formalize” the terms of the settlement, which was first disclosed in October 2017. In addition, Bruce pointed out that Bank of America made false claims to the federal government by trying to collect federal mortgage insurance benefits from foreclosures.

“This Agreement is neither an admission of liability by the Bank of America Parties nor a concession by Relator or the United States that the claims are not well founded,” the settlement states.

It is important to note that two days after the settlement was filed, the court granted the federal government’s motion to intervene in the whistle blower case. Bruce further alleged these foreclosures were improperly done. Documentation did not meet the current standard set by the 2012 National Mortgage Settlement.

Bruce alleged Bank of America and other major financial institutions are supposed to adhere to these policies when handling foreclosure matters, but failed to do so. Under the terms of the settlement, Bank of America will pay $3.4 million to the federal government with $891,000 going to Jacobs for his role as a whistle blower.

Bank of America will also pay $1.5 million for Bruce’s legal fees and an additional $100,000 for any other litigation expenses.

Whistle blowers often receive between 15% to 30% of whatever settlement is recovered from the qui tam lawsuit.

It is important to note that in order to be considered a whistle blower, the individual reporting the fraud must be the primary source of the information and cannot infer secondary sources. Lawyers involved in this whistle blower case are hoping this will encourage other individuals to step forward, to report fraud and file a qui tam lawsuit.

This Whistle Blower Case is U.S. et al. v. Bank of America Corp. et al., Case No. 1:15-cv-24585, in the U.S. District Court for the Southern District of Florida.