In a settlement announced in October, 2015, Fifth Third Bank paid $85 million to the federal government to settle claims under the False Claims Act (“FCA”) relating to the Bank’s practices in connection with loans insured by the Federal Housing Administration (FHA). The settlement also resolves a whistleblower lawsuit filed in June, 2011 in the Southern District of New York. The qui tam lawsuit was filed on behalf of a former chief appraiser at the Bank, who alleged a broad range of commercial and residential mortgage violations, including fraudulent appraisal practices, which resulted in significant losses to the federal government.
Kathryn M. Schilling was lead counsel for the relators in this case. Regarding this important settlement, Manhattan U.S. Attorney Preet Bharara said: “Federal insurers rely on banks when they promise that the mortgage loans they originate are eligible for that insurance. When banks discover that some of the loans are lemons and that their promises of quality were false, as Fifth Third Bank did, they must come forward and report it promptly, so that taxpayers don’t get stuck with the bill.”