After agreeing to pay nearly $17 billion to settle federal probes over its sale of mortgage bonds, Bank of America is trying to get out of a $1.27 billion penalty for defective loans sold by its Countrywide unit
After agreeing to pay nearly $17 billion to settle federal probes over its sale of mortgage bonds, Bank of America is trying to get out of a $1.27 billion penalty for defective loans sold by its Countrywide unit.
The bank asked U.S. District Court Judge Jed Rakoff to void a jury verdict finding it liable for fraud over the Countrywide loans, according to a Reuters report. The bank’s lawyers said the prosecutors failed to prove that the defective loans, originated through a streamlined process known as “Hustle” and then sold to Fannie Mae and Freddie Mac, were not as good as Countrywide represented.
“The trial evidence, even viewed in the light most favorable to the government, did not prove fraud under this standard,” bank attorneys claimed.
A jury found the bank and former Countrywide exec Rebecca Mairone liable for fraud last year. Government prosecutors said Countrywide’s “Hustle” program streamlined the loan process to the point that quality checks were all but eliminated. Employees were rewarded for producing more loans, not for the quality of those loans.
After the verdict, Rakoff ordered Mairone to pay a $1 million penalty and the bank to pay $1.27 billion. That amount wasn’t included in the bank’s recent $16.65 billion settlement.
The bank asked U.S. District Court Judge Jed Rakoff to void a jury verdict finding it liable for fraud over the Countrywide loans, according to a Reuters report. The bank’s lawyers said the prosecutors failed to prove that the defective loans, originated through a streamlined process known as “Hustle” and then sold to Fannie Mae and Freddie Mac, were not as good as Countrywide represented.
“The trial evidence, even viewed in the light most favorable to the government, did not prove fraud under this standard,” bank attorneys claimed.
A jury found the bank and former Countrywide exec Rebecca Mairone liable for fraud last year. Government prosecutors said Countrywide’s “Hustle” program streamlined the loan process to the point that quality checks were all but eliminated. Employees were rewarded for producing more loans, not for the quality of those loans.
After the verdict, Rakoff ordered Mairone to pay a $1 million penalty and the bank to pay $1.27 billion. That amount wasn’t included in the bank’s recent $16.65 billion settlement.
