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 BusinessNEW YORK — Yes, your mutual fund may own some Greek stocks. No, most likely not a lot. Full StoryNike came out with a new product last Tuesday, an updated and — for my feet — more comfortable... Full Story
- Most Popular
- Most Emailed
- RICHARD'S POOR ALMANACK: On this day 1739, 'Richard Palmer' identified in prison at York Castle as the notorious outlaw DICK TURPIN; IN 1836, Battle of the Alamo begins near San Antonio de Bexar, Texas; 1896, the Tootsie Roll invented by LEO HIRSCHFELD.
- RICHARD'S POOR ALMANACK: On this day in 1472, Orkney, Shetland islands put up as collateral by Norway to Scotland in lieu of dowry for MARGARET OF DENMARK on her marriage with JAMES III, king of Scotland; 1962, JOHN GLENN first American to orbit Earth.
- TOMORROW'S HEADLINES TODAY: City mayoral candidates debate campaign issues; Hartford, Conn., woman still missing; Neal Goswami reports attempts to legislate suicide; local woman loses 100 pounds through TOPS program.
- RICHARD'S POOR ALMANACK: On this day in 1878, JOHN TUNSTALL murdered near Lincoln, New Mexico, by the outlaw JESSE EVANS; in 1930, ELM FARM OLLIE first cow to fly in aircraft, first to be milked airborne; 1955, nuke test WASP; '79, snow in Sahara.
- TOMORROW'S HEADLINES TODAY: Rutland Herald News Editor Alan J. Keays and staff writer Gordon Dritschilo discuss stories planned for the February 18, 2015, edition of the newspaper: Winter budgets maxed, legal marijuana, Springfield bank job, USPS slowdown
- RICHARD'S POOR ALMANACK: On this day in 1249 AD, ANDRE of LONGJUMEAU is dispatched by LOUIS IX of France to meet the KHAGAN, ruler of the Mongol Empire; in 1804, during 1st Barbary War, STEPHEN DECATUR scuttles the pirate-held USS Philadelphia in Tripoli.