US sues Bank of America for dodgy mortgages
The United States sued Bank of America today for more than $1 billion for allegedly having sold dodgy mortgages to state-controlled mortgage financers Fannie Mae and Freddie Mac.world Updated: Oct 24, 2012 22:45 IST
The United States sued Bank of America on Wednesday for more than $1 billion for allegedly having sold dodgy mortgages to state-controlled mortgage financers Fannie Mae and Freddie Mac.
The government charged that Countrywide -- the mortgage giant now owned by Bank of America -- labeled defective mortgages as good-quality and sold them to the two companies.
The suit says that between 2007 and 2009 Countrywide ran a mortgage origination program called "Hustle" which aimed to quickly process thousands of new mortgages without quality controls and then sell them to Fannie and Freddie.
Hustle caused "over $1 billion dollars in losses and countless foreclosures," Preet Bahara, the US attorney in New York City, said in a statement.
"The fraudulent conduct alleged in today's complaint was spectacularly brazen in scope," Bahara said.
"Countrywide and Bank of America made disastrously bad loans and stuck taxpayers with the bill."
"This lawsuit should send another clear message that reckless lending practices will not be tolerated."