Due Diligence

by Brian Mahany

It’s easy to think there is no justice in the world, just turn on TV and watch the evening news. Every now and then, however, the good guys win. In the case of Deutsche Bank and MortgageIT, taxpayers will soon get back $202,000,000.

In May of last year, the U.S. Attorney in Manhattan and HUD accused the two financial firms of using the government as their own private piggy bank.  Preet Bahara, the U.S. Attorney for the Southern District of New York, said “MortageIT and Deutsche Bank treated FHA insurance as free government money to backstop lending practices that did not follow the rules… Their failure to meet these requirements caused substantial losses to the government – losses that could have and should have been avoided.”

The case was brought under the federal false claims act, sometimes called the Lincoln Law. That law allows private citizens – whistleblowers – to bring a lawsuit in the name of the government. Because FHA insurance backs many residential mortgages, the costs associated with bad loans fall on the shoulders of taxpayers. In this case, the government accused the banks of falsely certifying that risky mortgage loans met federal HUD guidelines. Things were so bad at MortgageIt that when an outside auditor found serious problems, those findings were “literally stuffed in a closet and left unread and unopened.”

Ultimately some 39,000 loans were written before the government stepped in.

The Manhattan U.S. Attorney’s Office has recovered $493.4 million from mortgage lenders in the last 3 months. The largest case – HUD’s $2.4 billion case against Allied Home Mortgage is still pending. The whistleblower in that case stands to collect up to 30% of what the government collects. Think about that – had you been the whistleblower in the Deutsche Bank case, you could be receiving a check of $60 million! [Ed. Note - our firm brought the case against Allied Home Mortgage on behalf of a whistleblower.]

Violating HUD rules and writing bad loans is not a victimless crime. Housing prices remain depressed and tens of millions of Americans are now underwater on their mortgages. The mortgage crisis today can be directly traced to the actions of Deuteche Bank, Allied, Citimortgage and other large lenders.

Without whistleblowers, the government would have a hard time proving these cases. If you or were employed by a lender or otherwise have inside information about mortgage fraud, give us a call. Your information could easily be worth millions.

If you would like to confidentially discuss your case with us, contact attorney Anthony Dietz at adietz@mahanyertl.com. For immediate assistance, contact attorney Brian Mahany at brian@mahanyertl.com or by telephone at (414) 704-6731 (direct).

Mahany & Ertl is a full service law firm. As a general rule, we do not handle foreclosure defense work. Instead, we represent whistleblowers and sue lenders and mortgage servicing companies in state and federal court for their wrongful and illegal conduct. If you think you have a case that meets our criteria, please give us a call. As noted above, we presently we have the largest federal false claims fraud case in the United States against a mortgage lender.

Mahany & Ertl – America’s Fraud Lawyers. We proudly represent whistleblowers and homeowners across the United States from our offices in Milwaukee, Wisconsin; Detroit, Michigan; Portland, maine & Minneapolis, Minnesota.