Federal prosecutors in Manhattan are suing Bank of America for more than $1 billion for mortgage fraud against Fannie Mae and Freddie Mac.
Preet Bharara, the United States Attorney for the Southern District of New York, announced Wednesday that the U.S. has filed a civil mortgage fraud lawsuit against Bank of America and its predecessors Countrywide Financial Corporation and Countrywide Home Loans, Inc.
Specifically, the Complaint alleges that from at least 2007 through 2009, Countrywide, and later Bank of America after acquiring Countrywide in 2008, implemented a new loan origination process called the “Hustle,” which was intentionally designed to process loans at high speed and without quality checkpoints, and which generated thousands of fraudulent and otherwise defective residential mortgage loans sold to Fannie Mae and Freddie Mac that later defaulted, causing over $1 billion dollars in losses and countless foreclosures.
“For the sixth time in less than 18 months, this Office has been compelled to sue a major U.S. bank for reckless mortgage practices in the lead-up to the financial crisis. The fraudulent conduct alleged in today’s complaint was spectacularly brazen in scope, Manhattan U.S. Attorney Preet Bharara said in a statement. “As alleged, through a program aptly named ‘the Hustle,’ Countrywide and Bank of America made disastrously bad loans and stuck taxpayers with the bill. As described, Countrywide and Bank of America systematically removed every check in favor of its own balance — they cast aside underwriters, eliminated quality controls, incentivized unqualified personnel to cut corners, and concealed the resulting defects. These toxic products were then sold to the government sponsored enterprises as good loans. This lawsuit should send another clear message that reckless lending practices will not be tolerated.”