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United States v. Bank of America

United States District Court, District of Columbia

March 18, 2014

UNITED STATES, et al., Plaintiffs,
v.
BANK OF AMERICA, et al., Defendants.

OPINION REGARDING MOTION TO INTERVENE

ROSEMARY M. COLLYER, District Judge.

Alleging misconduct in home mortgage practices, the United States and numerous State attorneys general sued major mortgagees including Citigroup, Inc.; Citibank, N.A.; and CitiMortgage, Inc. (collectively, Citi). All parties agreed to a settlement, resulting in multiple consent judgments. Raymond Wray, acting under the Servicemembers Civil Relief Act (SCRA), 50 U.S.C. app. §§ 501, et seq., seeks to intervene to set aside or amend the Consent Judgment with Citi to remove a release provision relating to interest rate relief. As explained below, the motion to intervene will be denied.

I. FACTS

On March 12, 2012, the Department of Justice, forty-nine State attorneys general, [1] and the attorney general for the District of Columbia filed this case alleging that Citi and other banks[2] engaged in misconduct in making Federal Housing Administration (FHA) insured mortgage loans. See Compl. [Dkt. 1].

FHA provides mortgage insurance on loans made by approved lenders throughout the United States, including mortgages on single family housing. Id. ¶ 15. FHA mortgage insurance provides lenders with protection against losses if mortgagors default. Id. ¶ 16. FHA approved lenders, known as Direct Endorsement Lenders, are required to ensure that loans meet strict underwriting criteria in order to be eligible for insurance, including income verification, credit analysis, and property appraisal. Id. ¶¶ 17, 69. The United States and State attorneys general complained that certain of the banks' activities that related to loan servicing, origination, and certification violated a host of laws. The Complaint set forth the following eight Counts:

Count I - unfair and deceptive consumer practices with respect to loan servicing;
Count II - unfair and deceptive consumer practices with respect to foreclosure processing;
Count III - unfair and deceptive consumer practices with respect to origination;
Count IV - violation of the False Claims Act (or FCA), 31 U.S.C. §§ 3729(a)(1)(A)-(C) & (G) and 31 U.S.C. §§ 3729(a)(1)-(3) & (7);
Count V - violation of the Financial Institutions Reform, Recovery and Enforcement Act of 1989 (FIRREA), 12 U.S.C. § 1833a;
Count VI - violation of the SCRA;
Count VII - declaratory judgment under 28 U.S.C. §§ 2201, 2202; and
Count VIII - abuse of the bankruptcy process ...

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