The blog of Xeno, a slightly mad scientist
Bank of America’s Countrywide Financial unit has been found liable for defrauding two US government-backed mortgage companies by a federal jury.Countrywide, which was acquired by Bank of America in 2008, was accused of selling thousands of defective loans to Fannie Mae and Freddie Mac.
The ruling is a major win for the US government, which launched the case in the wake of the financial crisis.
The Justice Department is seeking as much as $848m (£523m) in penalties.
The judge who presided over the trial said a civil penalty will be decided at a later date.
A former Countrywide executive Rebecca Mairone was also found liable on a civil fraud charge. She was the only individual to be sued by the government in the case.
“High-speed swim lane”The month-long trial focused on a Countrywide programme that was internally called “Hustle” or “high-speed swim lane” which allowed loans to be processed quickly without checking their quality.
The wrongdoing, which mostly took place before Countrywide was acquired, was discovered after a whistleblower filed a lawsuit against the firm.
Manhattan US Attorney Preet Bharara welcomed the ruling.
“In a rush to feed at the trough of easy mortgage money on the eve of the financial crisis, Bank of America purchased Countrywide, thinking it had gobbled up a cash cow,” he said in a statement. …
As a first time home buyer I was a victim of Counrtywide’s predatory lending. I want my otherwise excellent credit rating soiled by a short sale returned to what it would be had Counrtywide not lied to me when I asked for a 30 yr fixed loan and was sold a pay option ARM.