The mortgage finance sector had a lot to do with the monetary; meltdown of the past couple of years. Consequently, there have been and will continue to be lawsuits seeking to undo a lot of the damage. A recently-filed Bank of America mortgage fraud lawsuit was filed by the government, seeking $1 billion in problems from fraudulently sold mortgage loans.

Bank of America mortgage fraud lawsuit a result of getting Countrywide

One of the most egregious actors in the misdoings of the mortgage finance market is generally held to be Countrywide, which imploded and ultimately had to be purchased by Bank of America. Since then, B of a has been slapped with a number of lawsuits related to the misdeeds of the 2008 addition to the bank’s mortgage division.

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 a number of loans to Freddie Mac and Fannie Mae fraudulently.

Hustle and flow

The Bank of America mortgage fraud lawsuit states that before and after Countrywide had been acquired and absorbed to the business, a program known as „High Speed Swim Lane,“ according to the Washington Post, or „HSSL“ or „hustle“ was in place that essentially put mortgages on the fast track to federal backing without properly vetting the mortgage loans.

The program is alleged to have paid employees bonuses if they were willing to overlook quality of the mortgage and skip verification of income. They were even encouraged to falsify info if it meant giving out mortgages. According to USA Today, the program is suspected of taking place from 2007 to 2009, well after B of A took over the business.

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 information is right because that is not Fannie and Freddie’s job.

Incorrect

The government has the right to sue considering Freddie and Fannie are basically under government control right now. The Justice Department is upset because Bank of America 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.

A lot of people who bought homes with the loans have been foreclosed on, though Bank of America denies any wrongdoing. A 2008 study found that 57 percent of homeowners were in the program and defaulted, according to USA Today.

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