We love the mortgage banking industry. That may come as a shock to some, especially since we have successfully sued lenders multiple times. Although we are best known for last year’s record breaking $16.65 billion settlement against Bank of America, we don’t hate lenders.
Sure, some big banks like Wells Fargo and Bank of America are probably too far gone to be fixed. And some loan servicers like Ocwen need to be shut down too. Despite their being some bad apples in the industry, 99% of the rank and file workers in these companies are wonderful people simply trying to do their job properly.
And that brings us to this post. At a recent meeting of the Mortgage Bankers Association, outgoing chairman Bill Cosgrove told an audience, “Drive activism through your company culture. Don’t let strangers in Washington and state houses determine the direction of your companies.”
We agree that there should be activism within the lending industry’s corporate culture. That activism should be focused on becoming better corporate citizens and eliminating fraud and greed, however. If you want to get the “Washington strangers” out of your company, stop breaking the law.
When lenders write bad residential mortgage loans, taxpayers typically pickup the tab when the loan defaults. Mortgage lenders very rarely hold their own mortgages anymore. They earn their money in commissions. The push is to get the loan written and out the door. There Fannie Mae, Freddie Mac or the FHA guarantees the loan.
Since the financial meltdown, however, Fannie and Freddie are now backed with tax dollars. Add in the Federal Housing Administration (FHA), and taxpayers today guarantee most residential loans.
We hoped the Mortgage Bankers Association angry and unproductive rhetoric might ease up now that Cosgrove is done. It didn’t. At the recent annual meeting, incoming chairman Bill Emerson said the Justice Department’s enforcement actions were “irresponsible.” He also described the current regulatory environment as an “enforcement regime.”
To the extent that the Justice Department and HUD have been actively policing the industry, it is because the industry created the mess we are in. Millions of Americans lost their homes and millions more lost their jobs. Some families are still suffering and trying to get back on their feet even though the crisis occurred almost a decade ago.
Kicking the government around has become a spectator sport. Sometimes the blows are deserved but not in the lending industry.
Our comments are not to suggest that the industry is evil or that the workers are bad. As we stated before, 99% of mortgage industry people are honest, wonderful people. (We often represent them in overtime suits or commission cases.) The problem comes from some of the industry’s top executives, the folks that deliberately thwart quality control efforts and encourage underwriters to push through bad mortgages.
Having helped mortgage industry workers collect over $100 million in whistleblower awards, I can say first hand that the Justice Department is careful in the cases they take. The False Claims Act (whistleblower) statute is a fraud statute. It can’t be used to punish simple mistakes.
The annual meeting is over. The reporters have gone home. It is time for the leadership of the Association to help members come into compliance and avoid the fines and penalties of enforcement.
At the meeting, the group’s president Bill Emerson warned against “living the recession over and over again.” We agree. If we don’t want people on the street and unemployed, let’s make sure we write good loans.
As one of the leading whistleblower law firms in the nation, we are proud to take bad lenders to task. If you have inside information about fraud involving residential mortgages, give us a call. The consultation is absolutely confidential. We can help you evaluate whether you are entitled to a whistleblower award. (Awards are typically 15% to 30% of whatever the government collects.)
We also consider class action cases against lenders for violation of overtime pay rules.
Need more information? Give me a call. I can be reached at or by telephone at (414) 704-6731.
Post by Brian Mahany
MahanyLaw – America’s Whistleblower Lawyers