The $25 billion foreclosure settlement released Bank of America from a lawsuit charging the bank with fraud violations under the Home Affordable Modification Program.

Gregory Mackler, a former contractor with the servicing outsourcer Urban Lending Solutions, filed the lawsuit as a whistleblower on behalf of the U.S. in July. BofA contracted with companies like Urban for scanning documentation and working with borrowers seeking assistance through HAMP.

The lawsuit charges BofA with developing procedures that kept trainees like Mackler from researching or resolving any HAMP inquiries or complaints. The bank allegedly used workers, called homeowner advocates, who had little if any experience. They allegedly received no training on BofA computer systems nor had any way of contacting other bank associates, according to the suit.

As the bank installed single point of contacts for homeowners, as directed under consent orders with federal regulators in April, Mackler was promoted. As a SPOC, he allegedly escalated homeowners' concerns up the hierarchy and allegedly learned another BofA employee told at least one homeowner to voluntarily cancel her HAMP request with the promise of a private modification — a violation of HAMP guidelines.

Mackler claimed he and other workers were shut out of researching any resolution.

"Mackler experienced this situation time and time again," according to the suit. "Mackler also began to learn that the BofA architecture for handling HAMP mortgage modification complaints was rooted in fraud."

The multistate AG settlement scheduled to be filed Friday released BofA of any liability under the Mackler suit. The bank said it was providing $11 billion in relief and fines with the agreement.

According to a story in The New York Times, the bank agreed to write down more principal as part of a side deal to the settlement.

More releases are expected under the AG settlement filing for all five servicers.

A BofA spokesman said the bank received no evidence the allegations in the Mackler suit were true, and it focused on improving borrower experience through HAMP.

"At Bank of America, HAMP is the first of numerous programs we extended to our customers in need of assistance, and it is central to our ongoing efforts to assist our customers who continue to struggle with economic factors, including unemployment and under employment," the spokesman said.

The lawsuit sought between $5,500 and $11,000 fines for each violation, plus a payout to Mackler.

The Treasury Department paid $1.8 billion in HAMP servicer incentives through December, according to the special inspector general of the Troubled Asset Relief Program.

The Treasury withheld incentive payments from BofA for nearly the entire year last year. When the bank showed improvement in the third quarter scorecard, the Treasury returned $81.7 million in payments to the bank.