Bank Of America Settles Bankruptcy Case For $26.4 Million In Loans

How can Farkas be found guilty and homeowners still face foreclosure?

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In an unique settlement, Bank of America Corp. will hand over $26.4 million in mortgage loans to the bankruptcy liquidation trustee for defunct Taylor, Bean & Whitaker Mortgage Corp.

Ocala-based Taylor Bean and ex-CEO Lee Farkas perpetrated a $2.9 billion fraud, causing the collapse of Montgomery, Ala.-based Colonial Bank in the process. Taylor Bean was the nation’s largest private mortgage origination company when it filed for bankruptcy protection in 2009 after manufacturing fake loans and failing to service 528,000 others.

Farkas is serving a 30-year prison sentence.

“This is the largest fraud case nobody has ever heard about,” said attorney James Gassenheimer, a Miami partner at Berger Singerman, who represents the liquidating trustee Neil F. Luria, senior managing director of Solic Capital in Evanston, Ill.

A settlement plan was approved by U.S. Bankruptcy Judge Jerry A. Funk in Orlando in 2011, and Luria has been pursuing clawback lawsuits to reimburse…

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