Legal News

DOJ Sues Bank of America over Mortgage Fraud
Download PDF
1 Star2 Stars3 Stars4 Stars5 Stars (No Ratings Yet)
Loading...

On Wednesday, the U.S. Department of Justice filed its first civil fraud lawsuit against big mortgage financiers bailed out in 2008 by the U.S. government. In the fraud lawsuit, the DOJ accuses the Bank of America of selling thousands of toxic mortgages to Fannie Mae and Freddie Mac leading to the loss of close to $1 billion to taxpayers. The accusations were originally made by a whistleblower.

The lawsuit adds to the burden over mortgage related accusations faced by Bank of America, after it purchased Countrywide Finance Corp in July 2008.

The lawsuit graphically describes the “Hustle” scheme hatched by Countrywide and continued by Bank of America to bypass or ignore regulations and move the processing of residential home loans fast forward. The government alleged that mortgage executives had actively tried to remove “toll gates” that were in place to prevent fraudulent loans.

  
What
Where


The “Hustle” approach of mortgage executives with the motto, “Loans Move Forward, Never Backward,” led to defect rates nearing 40 percent, which is about nine times the industry norm, but Countrywide hid the facts from both Fannie Mae and Freddie Mac. Countrywide even went as far as awarding bonuses to staff for rebutting the existence of the problems.

The lawsuit also alleged that despite soaring defaults and foreclosures, the Bank of America did not buy back many of the defaulted loans from the ‘Hustle’ scheme, which continued through 2009. U.S. Attorney Preet Bharara in Manhattan said, “The fraudulent conduct alleged in today’s complaint was spectacularly brazen in scope … Countrywide and Bank of America made disastrously bad loans and stuck taxpayers with the bill.”

The lawsuit seeks triple damages under the federal False Claims Act, as well as civil fines.

Get JD Journal in Your Mail

Subscribe to our FREE daily news alerts and get the latest updates on the most happening events in the legal, business, and celebrity world. You also get your daily dose of humor and entertainment!!




However, Bank of America spokesman Lawrence Grayson said: “Bank of America has stepped up and acted responsibly to resolve legacy mortgage matters. The claim that we have failed to repurchase loans from Fannie Mae is simply false. At some point, Bank of America can’t be expected to compensate every entity that claims losses that actually were caused by the economic downturn.”





 

Interesting Legal Sites You May Like


BCG FEATURED JOB

Locations:

Keyword:



Search Now

General Municipal Law Attorney with land use experience

USA-CA-Oakland

Oakland office of our client seeks general municipal law attorney with experience advising public ag...

Apply Now

Senior Land Use Attorney with experience

USA-CA-San Francisco

San Francisco office of our client seeks senior land use attorney with 7+ years of experience. The c...

Apply Now

Immigration Attorney with portable business

USA-VA-McLean

McLean office is seeking an immigration attorney with $500,000+ in portable business.

Apply Now

Commercial Litigation Attorney with 4+ years of experience

USA-IL-Chicago

Chicago office of our client seeks commercial litigation attorney with 4+ years of experience. The c...

Apply Now

RELEVANT JOBS

Litigation Associate (Junior to Mid-Level) - Medical Malpractice - Garden City, NY

USA-NY-Garden City

Defense firm seeking junior to mid-level associate for Garden City office to fill Medical Malpractic...

Apply now

CIVIL LITIGATION ATTORNEY - Employment

USA-CA-Fresno

Lang, Richert & Patch a Fresno area AV-rated law firm located in the highly desirable Fig Garden Fin...

Apply now

ASSOCIATE ATTORNEY

USA-TX-Houston

INSURANCE DEFENSE / TRANSPORTATION LITIGATION Law firm located in North Houston seeking an associ...

Apply now

Hotline & Training Managing Attorney (IMMIGRATION)

USA-NY-New York City

Summary: The Hotline & Training Services Managing Attorney will guide, develop, and supervise the Ho...

Apply now

Most Popular

SEARCH IN ARCHIVE

To Top