A lawsuit has been unsealed accusing OneWest Bank FSB, a lender once known as IndyMac Bancorp Inc., of causing the U.S. government to improperly pay out $206 million under a federal program to help struggling homeowners avoid foreclosure, Reuters reported yesterday. According to a whistleblower complaint made public yesterday, OneWest violated the 2009 Home Affordable Modification Program (HAMP) by routinely tacking on thousands of dollars of debt to borrowers' principal balances, without providing required disclosures of terms such as payment amounts, interest rates, finance charges and late payment policies. The complaint said that OneWest would "virtually always" loan new amounts of principal, averaging $17,000 per contract, and fail to itemize as required under the federal Truth in Lending Act, making it impossible to tell whether the sums were proper. As a result, the lawsuit says the government paid $206 million of incentives under HAMP to help homeowners avoid foreclosure because of OneWest's false statements, including $58.3 million to OneWest.
