The government states in a $1 billion lawsuit that Bank of America and the former Countrywide, absorbed into B of a, sold mortgage fraudulently to Freddie Mac and Fannie Mae. The B of A mortgage fraud suit isn’t the first the financial institution has had to handle, nor likely will it be the very last.
Paying more after buy
Countrywide is a mortgage lender that Bank of America purchased when it went under during the recession. It is one of the mortgage corporations which were known for making a ton of financial blunders. B of A has been dealing with a ton of lawsuits due to the things the company did.
Another such suit has just been filed by the U.S. Lawyer of Manhattan, according to the New York Times, claiming mortgage fraud in a number of loans that Countrywide sold to federally owned but privately-run mortgage insurance houses Freddie Mac and Fannie Mae. The B of A mortgage fraud lawsuit seeks $1 billion in problems.
Obtaining federal backing fraudulently
The suit suggests that Countrywide had a program called “High Speed Swim Lane” that would get federal backing for the loans in spite of the fact that they were not vetted properly. This all happened before B of A acquired the company supposedly.
In essence, the program is alleged to have encouraged Countrywide and later Bank of America workers to overlook the standard of the mortgage loans, skipping a verification of the borrower’s income or falsifying information and giving bonuses to workers who could get the most mortgage loans lent. The program, according to USA Today, is said to have lasted from 2007 to 2009, after Countrywide had been fully absorbed.
One applicant, in Miami, was said to be making $15,500 per month but was later discovered to really be making $2,666 per month, and ended up defaulting in seven months. Another applicant’s $81,000 in debt was not disclosed in documents and received a mortgage they defaulted on within a year. Freddie and Fannie didn’t vet the mortgage loans before buying, relying on Countrywide and later Bank of America’s word.
Hear from Bank of America
Since Freddie Mac and Fannie Mae have essentially been placed under government conservatorship, the Justice Department is, by virtue of the B of A mortgage fraud suit, looking to reclaim $1 billion in losses incurred by the “hustle” program. The Justice Department also contends that the mortgage loans sold under the “hustle” program should have been repurchased, but Bank of America failed to do so.
According to USA Today, a 2008 study showed that 57 percent of homeowners in the program defaulted, and there were a lot in the program. The bank states all allegations are false while people are no longer in the homes they bought.
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Bank Of America Mortgage Fraud Suit Brought By Gov’t
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