FORECLOSURE DEFENSE: WHISTLE BLOWERS PROVIDE HELP

Ex-Capital One employee files whistleblower lawsuit

Thu Jun 12, 2008 5:49pm EDT

NEW YORK, June 12 (Reuters) – A former underwriter who says she was forced to resign after blowing the whistle on fraud at Capital One Financial Corp’s (COF.N: QuoteProfileResearchStock Buzz) subprime mortgage unit filed a $51 million lawsuit against her former employer on Thursday.

According to the suit filed in U.S. District Court in Manhattan, Rachel Steinmetz said she was forced into an “involuntary resignation” by her superiors in retaliation for refusing “to approve fraudulent, unlawful and bad loans” and reporting the activities to her superiors and authorities.

Capital One did not immediately return a call seeking comment.

Steinmetz had worked as a senior underwriter at GreenPoint Mortgage before its December 2006 acquisition by Capital One, according to the lawsuit.

She claims she was forced by superiors to approve loans that contained fraudulent information and that her bosses waited until she was out of the office to approve loans that she had denied.

In June 2006, she said she was forced to resign after her employers made her work environment intolerable.

Steinmetz reported her concerns about illegal activity to the New York State Banking Department and accused her former employer of violating Sarbanes-Oxley and banking “whistleblower” protections by forcing her to resign, according to the lawsuit.

Capital One shuttered GreenPoint Mortgage last August in the midst of the subprime mortgage crisis. It had acquired the unit less than a year earlier as part of its $13.2 billion deal for North Fork Bancorp Inc.

Steinmetz is seeking compensation for lost wages, bonuses and benefits of no less than $1 million and punitive damages of at least $50 million, plus interest and costs, according to the suit. (Reporting by Emily Chasan and Bill Berkrot; editing by Jeffrey Benkoe)

2 Responses

  1. A whistleblower is a person who raises a concern about wrong doing occurring in an organization or body of people
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  2. In 2004 my wife and I applied for an “interst only ” loan through a local mortgage broker. Ultimately we elected to go w/GPT. MTG. for a 375K loan @ 5.25% on a 3/27 basis. At the closing we signed off on an amortizing loan because we did not THOROUGHLY examine the 27 pages of paperwork and because the PMNT on page one appeared to be the same as quoted. Of course the payment did not include the escrow. Upon discovering this we contacted the broker who worked diligently to correct and change the loan. After COUNTLESS phone calls and communications and after being shuffled around like a ping pong ball I gave up and started to make payments $500. higher than I originally wanted. It finally caugth up with me and 30 months later I defaulted. In October of 2006 I filed a BK and I’m currently trying to negotiate a deed in lieu with the lender. I do not know whether my loan was

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