Bank of America hit with $1B lawsuit over alleged mortgage fraud
The complaint alleges that Countrywide Financial Corp., which Charlotte-based BofA purchased in 2008, engaged in a practice known as the "Hustle," a loan-origination process designed to push through loans at high speed and without quality checkpoints.
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#1 Oct 25, 2012
Bank of America is the fiscal cliff fall guy set up for controlled demolition.
“Reverse mortgage loan Texas”
Since: Sep 12
#4 Nov 8, 2012
Bank of America Corp. faces a $1 billion lawsuit in connection with allegations that Charlotte, N.C.-based BofA and predecessor Countrywide Financial sold fraudulently approved loans to government-backed Fannie Mae and Freddie Mac.
The civil mortgage fraud suit was filed around midday Wednesday by Preet Bharara, the U.S. attorney for the Southern District of New York.
The complaint accuses Countrywide, which BofA (NYSE: BAC) acquired in 2008, of promoting a practice known as HSSL or the Hustle, which stands for High Speed Swim Lane. It was an internal effort to remove quality checkpoints and quickly approve high volumes of mortgages that could be sold to government-sponsored entities Fannie and Freddie, the suit alleges.
Hustle eventually led to thousands of fraudulent and defective residential mortgage loans being sold to Fannie Mae and Freddie Mac that later defaulted, causing foreclosures and more than $1 billion in losses, according to the complaint. The practice began in 2007 and continued through 2009, the suit says, after BofA purchased Countrywide.
The fraudulent conduct alleged in todays complaint was spectacularly brazen in scope, Bharara says in a statement.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.
Documents filed in court Wednesday allege low-level clerks at Countrywide and BofA were paid bonuses to push risky loans through an approval process.
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