Fifth Third Bancorp
agreed to pay $85 million to settle civil fraud claims for sticking the government
with defective residential mortgages.
Fifth Third, Ohio’s
biggest bank, voluntarily disclosed it had wrongly certified 1,400 loans as
eligible to be insured by the Federal Housing Administration, then failed to
tell regulators when it determined they were defective, U.S. Attorney Preet
Bharara said in a statement today.
The settlement covers
U.S. losses on 500 of the loans that defaulted. Fifth Third will also absorb
costs that the government may incur if some of the remaining 900 loans go into
default.
The accord was approved
Monday by U.S. District Judge Deborah Batts, according to the statement,
resolving a whistle- blower suit that was filed under seal in 2011. Batts on
Monday unsealed the suit.
Larry Magnesen, a
spokesman for Cincinnati-based Fifth Third, didn’t immediately respond to
voicemail and e-mail messages seeking comment on the settlement.
BLOOMBERG NEWS
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