The federal government has been cracking down recently against mortgage fraud in the housing finance industry, slapping large firms with enormous lawsuits. A recently-filed Bank of America mortgage fraud lawsuit seeks $1 billion in damages for toxic loans sold to Freddie Mac and Fannie Mae.
Acquisition not the best plan apparently
When Countrywide was still its own company, it made a ton of financial mistakes that brought on a number of people to want to sue. The business went under in 2008 when the recession hit and had to be bought by Bank of America. Now, Bank of America is dealing with all the suits that Countrywide faced.
According to the New York Times, another suit was just filed by the United States Attorney of Manhattan claiming $1 billion in damages. Apparently, countrywide sold a number of loans to Fannie Mae and Freddie Mac fraudulently.
Hustle and flow
A "High Speed Swim Lane" was used at Countrywide before it was owned by Bank of America that put mortgage loans on a fast track to federal backing without really vetting the mortgages properly, according to the lawsuit.
The program is alleged to have paid workers bonuses if they were willing to overlook quality of the mortgage and skip verification of income. They were even encouraged to falsify info if it meant giving out mortgages. According to USA Today, the program is suspected of taking place from 2007 to 2009, well after Bank of America took over the company.
One applicant, in Miami, was said to be earning $15,500 per month but was later found to actually be making $2,666 per month, and ended up defaulting in seven months. Another applicant's $81,000 in debt was not disclosed in documents and received a mortgage they defaulted on within a year. Fannie and Freddie didn't vet the mortgage loans before buying, relying on Countrywide and later Bank of America's word.
Lies about this
The government has the right to sue considering Freddie and Fannie are essentially under government control right now. The Justice Department is upset because Bank of America should have repurchased any loans sold under the program, but the bank failed to do so. That is why the Justice Department wants to get $1 billion in losses.
The bank contends that the allegations are "simply false." Meanwhile, many of the people who bought homes with these loans are no longer in them. According to USA Today, a 2008 study found that 57 percent of homeowners whose loans were in the "hustle" program defaulted.
Acquisition not the best plan apparently
When Countrywide was still its own company, it made a ton of financial mistakes that brought on a number of people to want to sue. The business went under in 2008 when the recession hit and had to be bought by Bank of America. Now, Bank of America is dealing with all the suits that Countrywide faced.
According to the New York Times, another suit was just filed by the United States Attorney of Manhattan claiming $1 billion in damages. Apparently, countrywide sold a number of loans to Fannie Mae and Freddie Mac fraudulently.
Hustle and flow
A "High Speed Swim Lane" was used at Countrywide before it was owned by Bank of America that put mortgage loans on a fast track to federal backing without really vetting the mortgages properly, according to the lawsuit.
The program is alleged to have paid workers bonuses if they were willing to overlook quality of the mortgage and skip verification of income. They were even encouraged to falsify info if it meant giving out mortgages. According to USA Today, the program is suspected of taking place from 2007 to 2009, well after Bank of America took over the company.
One applicant, in Miami, was said to be earning $15,500 per month but was later found to actually be making $2,666 per month, and ended up defaulting in seven months. Another applicant's $81,000 in debt was not disclosed in documents and received a mortgage they defaulted on within a year. Fannie and Freddie didn't vet the mortgage loans before buying, relying on Countrywide and later Bank of America's word.
Lies about this
The government has the right to sue considering Freddie and Fannie are essentially under government control right now. The Justice Department is upset because Bank of America should have repurchased any loans sold under the program, but the bank failed to do so. That is why the Justice Department wants to get $1 billion in losses.
The bank contends that the allegations are "simply false." Meanwhile, many of the people who bought homes with these loans are no longer in them. According to USA Today, a 2008 study found that 57 percent of homeowners whose loans were in the "hustle" program defaulted.
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