The bank was found liable for fraud over defective mortgages sold by its Countrywide unit.
Bank of America has been urged by the US government to pay $863.6 million in damages after it was found liable for fraud over defective mortgages sold by its Countrywide unit.
The US government has also asked for penalties against Rebeca Mairone, a former midlevel executive at the bank�™s Countrywide unit District Court in Manhattan, who was also found liable by a federal jury.
Both Bank of America and Mairone were found liable for defrauding government-controlled mortgage companies Fannie Mae and Freddie Mac through selling substandard loans purchased from Countrywide in 2007 and 2008.
According to the government, the penalties were necessary to punish the bank and Mairone “and to send a clear and unambiguous message that mortgage fraud for profit will not be tolerated.”
The amount of penalties is based on the gross loss Fannie Mae and Freddie Mac incurred on the loans, the government said.
The case is related to a mortgage lending process at Countrywide, bought by Bank of America in July 2008, which is known as the �œHigh Speed Swim Lane,” or HSSL or Hustle.
According to the government, the Countrywide�™s program rewarded employees for the quantity rather than the quality of loans given and eliminated checkpoints used to ensure that loans were sound.
Also in August, the US government filed two lawsuits against the bank stating that it committed a fraud involving $850 million of residential mortgage-backed securities.
�œUnprecedented portion of the mortgage loans backing the security had been originated through mortgage brokers unaffiliated with the Bank of America Entities,” read the lawsuits.
The bank deliberately kept investors unaware of the risks connected to the securities.
AT/HJ
Source: Press TV