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A former executive at Countrywide Financial Corporation is going to receive $57 million for his role in a whistle-blower lawsuit against Bank of America Corporation that resulted in the lender settling federal mortgage fraud charges for approximately $16.7 billion, the largest financial settlement in U.S. judicial history.
According to a Bloomberg News report, Edward O'Donnell, a former Countrywide executive vice president, filed a lawsuit against the Charlotte, N.C.-headquartered bank in August in which he accused Countrywide of selling mortgages with inadequate underwriting under the aegis of its "High Speed Swim Lane" program to Fannie Mae and Freddie Mac. Bank of America acquired Countrywide in 2008.
O’Donnell’s payout is a based on the False Claims Act, which enables whistle-blowers to claim 15 percent to 25 percent of what the federal government recovers in its successful prosecutions or out-of-court settlements.
Separate from the O’Donnell case, Bank of America’s legal problems continued yesterday when the National Credit Union Administration (NCUA), the federal regulator for the credit union industry, filed suit in federal court against the lender and U.S. Bank National Association, alleging that they violated state and federal laws by not fulfilling their trustee duties for 99 residential mortgage-backed securities trusts. The NCUA charged that five corporate credit unions-U.S. Central, WesCorp, Members United, Southwest and Constitution-purchased approximately $5.8 billion in residential mortgage-backed securities (RMBS) issued from the trusts between 2004 and 2007, but these securities lost their value and contributed to the failure of all five credit unions.