Former Countrywide Financial Corp. executive Edward O'Donnell will get $57 million for his part in bringing a whistle-blower lawsuit against Bank of America Corp. that helped the U.S. force the lender to pay almost $16.7 billion to settle mortgage fraud charges.
Federal prosecutors in New York agreed to the payment, according to a filing that was part of O'Donnell's August lawsuit against the bank, in which he alleged it submitted false documents to Fannie Mae and Freddie Mac about loan underwriting and quality control. The complaint was unsealed Monday.
O'Donnell said he went to federal authorities and filed a whistle-blower lawsuit after learning the government might settle with the lender. He contacted the office of Manhattan U.S. Atty. Preet Bharara in February 2012 after reading in news accounts that the Justice Department was considering settling with large U.S. banks accused of selling bad mortgages to government-sponsored enterprises.
In a complaint filed that month under the False Claims Act and unsealed eight months later, O'Donnell alleged that Countrywide issued defective mortgages under its "High Speed Swim Lane" program, or HSSL, and then sold them to Fannie Mae and Freddie Mac. The U.S. later joined the suit.
Bank of America's $16.7-billion settlement in August to end federal and state probes into mortgage bond sales included $9.65 billion in cash and $7 billion in consumer relief.
Whistle-blower lawsuits brought under the False Claims Act allow whistle-blowers to claim 15% to 25% of what the government recovers in the case.