#BankOfAmericas #Countrywide #found #guilty of #mortgagefraud #BoA #liable for up to $848m in #damages after Countrywide found guilty of #selling #bad #loans to #FannieMae and #FreddieMac Countrywide #Financial Countrywide was #bought by Bank of America in 2008 as the #housing #market #spiralled #towards #collapse. Photograph: Getty Images Countrywide, once the #USs #largest #subprime mortgage #company, and one of its #former #executives have been found guilty of fraud by a #NewYork #jury. The #lender is now owned by Bank of America, and the #decision marks the #firsttime a #bank has been found by a US #court to be #responsible for #wrongdoing tied to its #dealings in the financial #crisis. Countrywide was found guilty of #defrauding #federal mortgage #giants Fannie Mae and Freddie Mac as the height of the housing crisis. The government claims Fannie and Freddie made a #grossloss of $848m on #suspect loans they bought from Countrywide – an amount the government said it would be seeking to #recoup from BoA. The jury also found former Countrywide #executive #RebeccaMairone guilty of fraud. Mairone was the only individual named as a #defendant in the #governments #lawsuit. Countrywide was bought by Bank of America in 2008 as the housing market spiralled towards a collapse driven by bad lending and speculation. Prosecutors in the office of Preet Bharara, the US attorney for the southern district of New York, alleged that Countrywide ran a scheme called Hustle before the collapse, aimed at funnelling a rapidly deteriorating portfolio of home loans on to Fannie and Freddie. The Hustle (or #HSSL, for High Speed Swim Lane) program stripped back underwriter reviews for loans, leaving few to no controls in the loan approval process. Even loans in which the borrowers income wasnt independently verified went unreviewed by underwriters, Bharara alleged. Countrywide assured Fannie and Freddie that underwriting standards had been tightened. At the same time, the company eliminated every significant checkpoint on loan quality and compensated its employees solely based on the volume of loans originated, leading to rampant instances of fraud and other serious defects, Bharara alleged. Most of the wrongdoing took place before Bank of America acquired Countrywide, but it continued into 2009, well after the acquisition, the lawsuit had said. Bank of America said it plans to appeal. It said in a statement: The jurys decision concerned a single Countrywide program that lasted several months and ended before Bank of Americas acquisition of the company. We will evaluate our options for appeal. In closing arguments of the four-week trial, assistant US attorney Jaimie Nawaday cited emails in which Countrywide employees described Hustle loans as loser loans. She said employees believed their loan quality was in the ditch but they still sold them to Fannie Mae and Freddie Mac for a quick profit. Mairone, who served as chief operating officer for Countrywides Full Spectrum Lending Division, defended her role at the company the trail. She said sales competitions with titles including On-Fire February and March Madness were certainly not something that got in the way of controls. Taking to the stand last week she told the court that quality had been important at the company. You cannot fund a loan without quality, she said. Its not good for the customer, its not good for the company and its not good for the investors. Civil penalties in the case will be determined by Manhattan district judge Jed Rakoff at a later date. theguardian/business/2013/oct/23/bank-of-america-countrywide-guilty-fraud?guni=Network%20front:network-front%20main-3%20Main%20trailblock:Network%20front%20-%20main%20trailblock:Position13
Posted on: Thu, 24 Oct 2013 16:50:03 +0000
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