The U.S. government urged that Bank of America Corp pay $863.6 million in damages after a federal jury found it liable for fraud over defective mortgages sold by its Countrywide unit. In a filing late Friday in the U.S. District Court in Manhattan, the government also asked for penalties against Rebecca Mairone, a former midlevel executive at the banks Countrywide unit who the jury also found liable, commensurate with her ability to pay. The government said the penalties were necessary to punish the bank and Mairone and to send a clear and unambiguous message that mortgage fraud for profit will not be tolerated. Bank of America and Mairone were each found liable for defrauding government-controlled mortgage companies Fannie Mae and Freddie Mac through the sale of shoddy loans purchased from Countrywide in 2007 and 2008. The case centered on a mortgage lending process at Countrywide, which Bank of America bought in July 2008, known as the High Speed Swim Lane, or alternatively HSSL or Hustle. The government said Countrywides program emphasized and rewarded employees for the quantity rather than the quality of loans produced, and eliminated checkpoints designed to ensure that loans were sound. The penalties the government requested are slightly higher than the amount lawyers in the office of Manhattan U.S. Attorney Preet Bharara had previously indicated they would seek, $848.2 million. The amount is based on the gross loss Fannie Mae and Freddie Mac incurred on the HSSL loans, the government said. Bank of America, the second-largest U.S. bank, has previously said it is evaluating its options for appeal. It is scheduled to respond to the governments penalty request by November 20.
Posted on: Sun, 10 Nov 2013 20:58:40 +0000