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Whistleblower Receives $14.5 Million for Bank of America Mortgage Fraud Case

Kyle Lagow, a former home appraiser, will receive $14.5 million as part of a whistleblower lawsuit that accused subprime lender Countrywide Financial of inflating appraisals on government-insured loans.  Lagow’s lawsuit led to an investigation that resulted in a $1 billion settlement, announced in February, between Bank of America Corp (NYS: BAC) which acquired Countrywide in 2008 and the U.S. Justice Department.  The DOJ officials alleged that Countrywide engaged in mortgage fraud. 

Lagow’s suit was one of five whistleblower complaints that were folded into the $25 billion national mortgage settlement that state and federal officials reached with Bank of America and four other lenders this year.  His suit was unsealed in February, but the amount of his settlement was not disclosed.

Gregory Mackler, a whistleblower who challenged Bank of America’s handling of the government’s HAMP mortgage modification program, has also finalized a settlement, according to Reuters

The complaints were brought under a whistleblower provision in the U.S. False Claims Act, which allows private individuals with knowledge of wrongdoing to bring suits on behalf of the government and share in the proceeds of any settlement.

Both Lagow and Mackler lost their jobs after raising concerns about practices at their companies and faced difficult times awaiting settlements.  Mackler, who worked at a firm called Urban Lending Solutions, brought his case in 2011.

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