NYC’s, state’s mortgage fraud damages may exceed $100M

A lawsuit against two dozen banks and mortgage servicers is alleging that New York City and New York State have been the victims of mortgage fraud with damages possibly exceeding $100 million.

These allegations of violations of the False Claims Act from Florida-based attorney and fraud expert Lynn Szymoniak and her legal team have just been unsealed. Now, Szymoniak and her lawyers are looking to bring big banks and mortgage servicers to trial in federal court.

Servicers among the accused include Chase Home Finance, Ally Financial, CitiMortgage, Wells Fargo Home Mortgage and Bank of America Mortgage Securities, the New York Post reported.

The suit alleges widespread creation and use of fraudulent mortgage documents, which reduced the value of mortgage backed securities purchased by the city and state.

“Almost every mortgage backed security issued from 2004 to 2007 bought by New York State and City is tainted by fraudulent mortgage documents,” Szymoniak said.

In 2012, Wells Fargo, Ally, Bank of America, Chase and Citi settled part of Szymoniak’s suit for $95 million as part of a $25 billion national mortgage settlement. Despite settling out of court, none of the banks admitted wrongdoing.

Szymoniak noted that in 2006 alone, privately issued mortgages were packaged and sold into 1,126 investment trusts, most of which had an average total loan balance of more than $1 billion.

Szymoniak and her legal team will try to determine exactly which mortgage backed securities were purchased by New York City and state. [NYP] – James Comtois