This case is about fraud committed against Freddie Mac. It is not a personal mortgage fraud claim. Please only contact Berger Montague if you know of a company committing mortgage fraud against the United States government.
Mortgage fraud continues to be one of the top areas of recovery under the False Claims Act, with allegations stemming from the many of the blunders of 2008 just recently reaching a settlement. In this mortgage fraud case involving loan servicer Ocwen and lender Wells Fargo, two borrowers are alleging a “default fraud” scheme in which both entities wrongfully classified the loan as in default in order to collect double fees and penalties. The allegations were filed in September 2014 and unsealed following the government’s decision not to intervene.
If you know of a company committing mortgage fraud against the United States government, contact a Berger Montague qui tam attorney today to have a free, confidential discussion about your claims.
Details of U.S. ex rel Mr. and Mrs. Schiano v. Wells Fargo & Co. et al.
The case, known as U.S. ex rel Schiano v. Wells Fargo & Co., et al., was filed in the U.S. District Court for the Southern District of New York. According to the allegations, the Schianos refinanced their home, which required a payoff of the first outstanding mortgage balance and the implementation of a new mortgage agreement with amended terms and a presumably lower interest rate. However, Ocwen and Wells Fargo allegedly diverted the payoff payment and immediately informed the owner of the loan – government-owned Freddie Mac – that the pair had defaulted on the note and foreclosure proceedings should begin.
According to the complaint, Freddie Mac eventually only received 80 percent of the payoff amount from its insurer, while Ocwen and Wells Fargo retained the remaining funds earmarked as fees and penalties. The companies are also alleged to have collected fees and penalties from the second refinanced mortgage as well, resulting in a “double recovery” and a clear violation of the False Claims Act, plaintiffs contend.
According to the language of the lawsuit, “This ‘False Default’ scheme allowed Wells Fargo and Ocwen to obtain, and continue to obtain through false defaults and refinancing payoff or failed refinancing and continued collection, monies to which they were not entitled at the expense of Freddie Mac…”
Plaintiffs classify the lawsuit as “reverse false claim,” wherein the government-backed lenders wrongfully received funds and failed to return the money to the government in a timely manner.
Wells Fargo is a Repeat Offender
This is not the only False Claims Act case against Wells Fargo. For instance, it lost its bid to avoid liability under the Act despite participating in a $5 billion nationwide mortgage fraud settlement. In the court’s opinion, it explained that Wells Fargo may have settled the fraud claims between itself and the FHA, but individual plaintiffs may still pursue their own causes of action for relief.
Contact Berger Montague Today
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*Note: Please do not contact Berger Montague about personal mortgage fraud claims. We are specifically looking for mortgage fraud committed against the US government.*