US wants Bank of America to pay $864M over loansThe Associated Press | November 10,2013NEW YORK — Federal prosecutors want Bank of America Corp. to pay about $864 million for losses incurred by the government after it bought thousands of home loans made by Countrywide Financial during the housing boom.
New York U.S. Attorney Preet Bharara made the request in documents filed late Friday with the U.S. District Court in Manhattan.
A jury last month found Bank of America, which acquired Countrywide in 2008, liable for knowingly selling thousands of bad home loans to Fannie Mae and Freddie Mac between August 2007 and May 2008.
The panel also returned the verdict against Countrywide and a former executive, Rebecca Mairone.
The trial related to mortgages the government said were sold at break-neck speed without regard to quality as the economy headed into a tailspin.
The government had accused the financial institutions of urging workers to churn out loans, accept fudged applications and hide ballooning defaults through a loan program called the Hustle, shorthand for high-speed swim lane, which operated under the motto, “Loans Move Forward, Never Backward.”
Bank of America, based in Charlotte, N.C., denied there was fraud.
Thousands of loans made through the Hustle program were sold to Fannie and Freddie, which packaged loans into securities and sold them to investors. The companies were effectively nationalized in 2008 when they nearly collapsed from mortgage losses.
In the filing Friday, Bharara asked the court to make the penalty on Bank of America equal to the maximum losses racked up from the Hustle program by the government-run mortgage buyers.
Bank of America spokesman Lawrence Grayson said Saturday that the lender plans to respond to the government’s penalty filing before a Nov. 20 deadline.
“We believe the filing overstates the volume of loans and the appropriate measure of damages arising from one narrow Countrywide program that lasted several months and ended before Bank of America acquired the company,” he said.
Bharara also wants the court to impose a penalty on Mairone — who prosecutors say was the driving force behind the Hustle program — that is in line with her ability to pay.
Mairone’s lawyer, Marc Mukasey in New York, said Saturday that he intends to file papers with the court arguing there should be no penalties imposed on his client.
Countrywide, once the country’s largest mortgage lender, played a major role in the collapse of the housing market because of its heavy reliance on subprime mortgages. Facing serious financial challenges, it was acquired by Bank of America in 2008 in an all-stock deal valued at about $4 billion.
In 2010, Bank of America agreed to pay $600 million to settle class-action lawsuits claiming that Countrywide officials concealed mounting financial risks as they loosened lending standards during the housing boom.
That same year, former Countrywide CEO Angelo Mozilo agreed to pay $67.5 million to settle accusations by the Securities and Exchange Commission that he had misled investors and engaged in insider trading.MORE IN National / World BusinessMUMBAI, India — India could put a landmark World Trade Organization deal in jeopardy at hectic... Full StoryWEST BRIDGEWATER, Mass. — It’s been called a David vs. Full StoryMOSCOW — Having for months dismissed Western sanctions on Russia as toothless, business leaders... Full Story
- Most Popular
- Most Emailed
- TODAY'S WEATHER MINUTE: Rutland Herald content editor Rich Alcott shares local weather information and easily digestible news tidbits: Earth barely avoids being blasted by immense solar flare in 2012, astrophysicists say next time might not be so lucky.
- RICHARD'S POOR ALMANACK: On this day in 1932, President Hoover orders the Army to evict bonus marchers from Anacostia Flats; author Malcolm Lowry born this day, as is Jackie Kennedy and Mike Bloomfield; Stephen Crane on consuming one's own heart.
- RICHARD'S POOR ALMANACK: On this day in 1898, Nelson Miles leads American troops into Puerto Rico during Spanish-American War, Bob Dylan electrifies Newport Folk Festival in 1965, author and longshoreman Eric Hoffer born this day in 1902.
- TOMORROW'S HEADLINES TODAY: No charges to be filed inconnection with crash of city police cruiser, farmers group turn to Internet to raise money for solar project, Street Talk polls passersby about legal marijuana.
- TODAY'S WEATHER MINUTE: Rutland Herald content editor Rich Alcott shares local weather information for Friday, July 25, and easily digestible news tidbits: Mysterious enormous hole in the Siberian tundra baffles scientists.
- TODAY'S WEATHER MINUTE: Rutland Herald content editor Rich Alcott shares local weather information and easily digestible news tidbits: Ever wonder why the otherwise straight-lined Appalachian chain's got a big crimp in it in Pennsylvania and and New York?