In a statement, attorneys representing former home appraisal manager Kyle W. Lagow, who blew the whistle on widespread fraud at Countrywide Financial, announced the final settlement of Lagow’s whistleblower action.
Lagow received over $14.5 million as a reward for his role in providing inside information that led to a $1 billion settlement between Bank of America and the U.S. government, the attorneys said.
Lagow’s whistleblower suit sparked an investigation culminating in the historic settlement between the Department of Justice and Bank of America, a settlement that was itself part of the larger global bank settlement announced last month, the second largest government civil settlement in history.
Lagow worked at LandSafe, an appraisal company owned by Countrywide Financial and ultimately acquired by Bank of America, from 2004-2008. The law firm said, according to his unsealed complaint, Lagow observed widespread disregard for laws that regulate FHA underwriting and home appraisals.
Specifically, he claimed that Countrywide conspired with LandSafe and homebuilder KB Homes to inflate the appraised value of homes, boosting the size of the lending giant’s loans to homebuyers. In order to accomplish this, the lending giant allegedly used a number of strong-arm tactics to pressure appraisers to report favorable home values.
The law requires that appraisers act neutrally and without regard to the lender’s interests, a safeguard meant to protect the government, who insures low- and moderate-income loans.
Also announced was final settlement of fraud claims by Gregory Mackler, a whistleblower who challenged Bank of America’s fraudulent handling of the Home Affordable Modification Program meant to help millions of struggling homeowners. His claim, which led to the return of over $6 million to the Department of Treasury from Bank of America, was also part of the global bank settlement.
To read the news release posted by Hagens Berman click here.
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