Bank of America’s Countrywide Financial unit has been found liable for defrauding two US government-backed mortgage companies by a federal jury.Countrywide, which was acquired by Bank of America in 2008, was accused of selling thousands of defective loans to Fannie Mae and Freddie Mac.
The ruling is a major win for the US government, which launched the case in the wake of the financial crisis.
The Justice Department is seeking as much as $848m (£523m) in penalties.
The judge who presided over the trial said a civil penalty will be decided at a later date.
A former Countrywide executive Rebecca Mairone was also found liable on a civil fraud charge. She was the only individual to be sued by the government in the case.
“High-speed swim lane”The month-long trial focused on a Countrywide programme that was internally called “Hustle” or “high-speed swim lane” which allowed loans to be processed quickly without checking their quality.
The wrongdoing, which mostly took place before Countrywide was acquired, was discovered after a whistleblower filed a lawsuit against the firm.
Manhattan US Attorney Preet Bharara welcomed the ruling.
“In a rush to feed at the trough of easy mortgage money on the eve of the financial crisis, Bank of America purchased Countrywide, thinking it had gobbled up a cash cow,” he said in a statement. …
As a first time home buyer I was a victim of Counrtywide’s predatory lending. Counrtywide lied when I asked for a 30 yr fixed loan and they sold me a pay option ARM.
Update Nov 2016: After many years, my credit did bounce back from the short sale. I was at a 767 FICO score before purchasing the home. After the short sale of my condominium, my credit score dipped about 100 points. I’m now back up to an 810 and above FICO, but it took many years of responsible financial behavior.