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US govt sues Bank of America for multi-year mortgage fraud

US govt sues Bank of America for multi-year mortgage fraud
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The US government has sued Bank of America for USD 1 billion on allegations of a multi-year mortgage fraud.

In a complaint filed in a New York court, the Department of Justice alleged that from 2007 through 2009, Countrywide, and later Bank of America after it acquiring Countrywide, implemented a new loan origination process called the Hustle, which was intentionally designed to process loans at high speed and without quality checkpoints.

This generated thousands of fraudulent and otherwise defective residential mortgage loans sold to Fannie Mae and Freddie Mac that later defaulted, causing over USD 1 billion in losses and countless foreclosures.

This is the first civil fraud suit brought by the Department of Justice concerning mortgage loans sold to Fannie Mae or Freddie Mac.

'For the sixth time in less than 18 months, this office has been compelled to sue a major US bank for reckless mortgage practices in the lead-up to the financial crisis,' said US attorney Preet Bharara.

‘Bank of America systematically removed every check in favour of its own balance,  they cast aside underwriters, eliminated quality controls, incentivised unqualified personnel to cut corners and concealed the resulting defects.
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