The mortgage finance market had a lot to do with the financial; meltdown of the past few years. As a result, there have been and will continue to be lawsuits planning to undo some of the damage. A recently-filed B of A mortgage fraud lawsuit was filed by the government, seeking $1 billion in damages from fraudulently sold mortgage loans.
Punishing B of A for purchase
Countrywide is a mortgage lender that Bank of America purchased when it went under during the recession. It is one of the mortgage businesses that were known for making a ton of financial blunders. B of A has been dealing with a ton of lawsuits due to the things the business did.
According to the New York Times, another suit was just filed by the United States Attorney of Manhattan claiming $1 billion in problems. Evidently, countrywide sold numerous loans to Freddie Mac and Fannie Mae fraudulently.
A quick track program
The suit suggests that Countrywide had a program called "High Speed Swim Lane" that would get federal backing for the loans despite the fact that they were not vetted properly. This all occurred before Bank of America acquired the business supposedly.
USA Today explained that the program lasted from 2007 to 2009, according to USA Today, which suggests that it stayed in place after B of A took on the company. The idea is that the program would skip verification of the borrower's income and would falsify info to be able to give workers bonuses for getting mortgage loans.
There was a borrower that defaulted within a year when $81,000 in debt was not disclosed on the loan documents. Another borrower was only making $2,666 per month but had written on the loan application $15,500 per month. That person defaulted in seven months. It is the bank's job to make sure all the info is right because that is not Fannie and Freddie's job.
Deny, deny, deny
The government has the right to sue considering Freddie and Fannie are basically under government control right now. The Justice Department is upset because B of A 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." In the meantime, 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.
Punishing B of A for purchase
Countrywide is a mortgage lender that Bank of America purchased when it went under during the recession. It is one of the mortgage businesses that were known for making a ton of financial blunders. B of A has been dealing with a ton of lawsuits due to the things the business did.
According to the New York Times, another suit was just filed by the United States Attorney of Manhattan claiming $1 billion in problems. Evidently, countrywide sold numerous loans to Freddie Mac and Fannie Mae fraudulently.
A quick track program
The suit suggests that Countrywide had a program called "High Speed Swim Lane" that would get federal backing for the loans despite the fact that they were not vetted properly. This all occurred before Bank of America acquired the business supposedly.
USA Today explained that the program lasted from 2007 to 2009, according to USA Today, which suggests that it stayed in place after B of A took on the company. The idea is that the program would skip verification of the borrower's income and would falsify info to be able to give workers bonuses for getting mortgage loans.
There was a borrower that defaulted within a year when $81,000 in debt was not disclosed on the loan documents. Another borrower was only making $2,666 per month but had written on the loan application $15,500 per month. That person defaulted in seven months. It is the bank's job to make sure all the info is right because that is not Fannie and Freddie's job.
Deny, deny, deny
The government has the right to sue considering Freddie and Fannie are basically under government control right now. The Justice Department is upset because B of A 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." In the meantime, 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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