News Videos
International Edition


August 22, 2017

Breaking News, World News and Taiwan News.
About Us
Contact Us

US sues Bank of America for US$1 bil. over bad mortgages

WASHINGTON -- The United States sued Bank of America (BofA) Wednesday for at least US$1 billion for allegedly dumping dodgy mortgages on state-controlled mortgage financers Fannie Mae and Freddie Mac.

The government charged that Countrywide Financial and Bank of America, which took over Countrywide in 2008, ran a program to process mortgages and ship them to Fannie and Freddie as fast as possible with little effort spent on ensuring the loans were viable.

The 2007-2009 program, nicknamed "Hustle," was run even as the U.S. housing sector was melting down, and caused "over US$1 billion dollars in losses and countless foreclosures," the Justice Department said.

To speed up the generation of new home loans and their sale to Fannie and Freddie, "Countrywide eliminated every significant checkpoint on loan quality and compensated its employees solely based on the volume of loans originated," the charges said.

That led to "rampant instances of fraud and other serious loan defects."

It said Countrywide ignored warnings that the program "would have catastrophic consequences on loan quality" and concealed its own reports on the quality of the loans.

After defaults began to soar in the loans, the charges said, Countrywide and Bank of America refused to buy them back or compensate the losses.

"The fraudulent conduct alleged in today's complaint was spectacularly brazen in scope," Preet Bahara, the U.S. attorney in New York City, said in a statement.

"Countrywide and Bank of America made disastrously bad loans and stuck taxpayers with the bill," he said.

"This lawsuit should send another clear message that reckless lending practices will not be tolerated."

Bank of America made no immediate comment on the suit.

BofA shares lost 0.5 percent in New York trade.

Countrywide was, at the height of the U.S. housing boom in the 2000s, the largest mortgage origination company in the United States.

As did many mortgage lenders, it resold most of its home loans to Fannie and Freddie, which fund more than half of the home mortgages in the country.

The case, the first the government has filed over toxic mortgages on behalf of Fannie and Freddie, is rooted in the requirements that originators properly vet any of the loans they rate as investment grade to sell on to the two state firms.

The case said Bank of America is responsible because it knowingly assumed Countrywide's liabilities when it took the company over in 2008.

Advertise  |   RSS Feed  |   About Us  |   Contact Us
Home  |   Taiwan  |   China  |   Business  |   Asia  |   World  |   Sports  |   Life  |  
Arts & Leisure  |   Health  |   Editorial  |   Commentary Travel  |   Movies  |   Guide Post  |   Terms of Use  |  
  chinapost search