Bank of America’s subprime lender Countrywide found guilty of mortgage fraud
By Agence France-Presse
Wednesday, October 23, 2013
A federal jury Wednesday concluded that Bank of America defrauded mortgage finance firms Fannie Mae and Freddie Mac with a lending program that fast-tracked mortgages ahead of the housing bust.
The jury’s ruling sets Bank of America on course for a federal civil penalty to be determined by US District Judge Jed Rakoff.
The lending program was created by Countrywide, once a giant in subprime mortgages, prior to its 2008 acquisition by Bank of America.
The Justice Department alleged that Countrywide created the so-called “Hustle” program in 2007 as government-backed Freddie and Fannie were tightening their underwriting guidelines and loan purchase requirements in response to rising loan defaults.
Countrywide allegedly eliminated key checkpoints on loan quality and compensated employees solely based on loan volumes, leading to “rampant instances of fraud” while Countrywide informed the loan-finance firms that it tightened requirements, the Justice Department said in court papers.
US Attorney Preet Bharara praised Wednesday’s verdict.
“In this case, Bank of America chose to defend Countrywide’s conduct with all its might and money, claiming there was no case here. The jury disagreed,” Bharara said in a statement.
“This office will never hesitate to go to trial to expose fraudulent corporate conduct and to hold companies accountable, particularly when it has caused such harm to the public.”
Bank of America, which denied that it engaged in fraud, said it was considering an appeal.
“The jury’s decision concerned a single Countrywide program that lasted several months and ended before Bank of America’s acquisition of the company,” said a Bank of America spokesman. “We will evaluate our options for appeal.”
The verdict comes as the US continues to press ahead with litigation against giant banks over their handling of mortgages and mortgage-backed securities ahead of the 2008 financial crisis.
The Justice Department and JPMorgan Chase are currently in negotiations over a multi-billion settlement [of course they made TRILLIONS in the process!]