Mortgage Lawsuit spurred on by the False Claims Act

4 05 2011

The False Claims Act of 1863 was created to hold accountable anyone who makes a fraudulent claim to the United States.

This week, the False Claim Act provided the reasoning that the US Attorney sued Deutsche Bank. The case will decide whether the bank did indeed make federally insured mortgage loans without doing the due diligence of checking on the accuracies of loan applicants. The Deutsche Bank repeatedly defended itself during the financial crisis of 2008, explaining that it had checked those details.

I agree that it is absolutely the responsibility of the lender to do a thorough investigation on the accuracy of the information provided by loan applications and that they should be held accountable… to an extent. Think about it. The United States (i.e., The People) is suing Goldman Sachs for allegedly making false claims that they checked the accuracy of the false information in the loan applications made by The People. This mortgage crisis was not only caused by opportunistic banks that consolidated mortgages and traded them as securities. It was also caused by opportunistic people who made false claims on the loan applications in order to invest in homes they could not afford.

Cases similar to this will likely occur in the near future against other Banks that were central to this mortgage lending crisis. This will hopefully lead to Wall Street being more accountable and expecting accountability from Main Street as well.




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