Good news — the Department of Justice has filed a $1 billion lawsuit against Bank of America for selling bad mortgages to the government between 2007 and 2009.
The U.S. Justice Department filed a civil complaint today in Manhattan federal court, claiming that Countrywide Financial and its parent Bank of America generated and sold Fannie Mae and Freddie Mac thousands of defective mortgage loans. Bank of America acquired Countrywide in 2008.
The lawsuit is the first by the Justice Department to allege fraud over mortgage loans sold to the two entities, U.S. Attorney Preet Bharara in Manhattan said today in a statement announcing the suit, which covers conduct from 2007 to 2009.
“The fraudulent conduct alleged in today’s complaint was spectacularly brazen,” Bharara said. “Through a program aptly named ‘the Hustle,’ Countrywide and Bank of America made disastrously bad loans and stuck taxpayers with the bill.”
More via Reuters
According to a complaint filed in Manhattan federal court, Countrywide in 2007 invented a scheme known as the “Hustle” designed to speed up processing of residential home loans.
Operating under the motto “Loans Move Forward, Never Backward,” mortgage executives tried to eliminate “toll gates” designed to ensure that loans were sound and not tainted by fraud, the government said. […]
Since paying $2.5 billion for Countrywide on July 1, 2008, the Charlotte, North Carolina-based bank has lost nearly $40 billion on mortgage litigation and requests by investors to buy back soured loans, Credit Suisse estimated on October 5.
If ‘the Hustle’ was indeed the name of the program, I expect Bank of America to either settle out of court or be embarrassed in the court room.
You have to marvel at the arrogance required to name your fraudulent mortgage program the “Hustle” and expect to never answer for it.
The fact that much of what Wall Street did leading up to the 2008 financial crisis was legal does not exempt them from civil lawsuits.