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DOJ Submits BofA Mortgage Fraud Lawsuit

fishsniffer.com | April 23, 2014

By PhyllisL

The government alleges in a $1 billion suit that Bank of America and the previous Countrywide, absorbed into B of a, sold mortgage fraudulently to Freddie Mac and Fannie Mae. The Bank of America mortgage fraud lawsuit is not the first the bank has had to handle, nor likely will it be the last.

Paying more after purchase

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 acquired by B of A. Since then, B of a has been slapped with numerous 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 Lawyer of Manhattan claiming $1 billion in problems. Evidently, countrywide sold a number of loans to Freddie Mac and Fannie Mae fraudulently.

A fast track program

The lawsuit suggests that Countrywide had a program called “High Speed Swim Lane” that would get federal backing for the loans despite the truth that they were not vetted properly. This all occurred before B of A acquired the company supposedly.

The program is alleged to have paid workers 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 happening from 2007 to 2009, well after B of A took over the company.

One applicant, in Miami, was said to be making $15,500 per month but was later discovered to actually be earning $2,666 per month, and ended up defaulting in seven months. Another applicant's $81,000 in debt was not disclosed in documents and received a mortgage they defaulted on within a year. Fannie and Freddie didn't vet the mortgages before getting, relying on Countrywide and later Bank of America's word.

Lies about it

Since Fannie Mae and Freddie Mac have essentially been placed under government conservatorship, the Justice Department is, by virtue of the B of A mortgage fraud suit, looking to reclaim $1 billion in losses incurred by the “hustle” program. The Justice Department also contends that the mortgages sold under the “hustle” program should have been repurchased, but Bank of America unsuccessful to do so.

The bank contends that the allegations are “simply false.” Meanwhile, 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.

Sources

  • New York Times
  • Washington Post
  • USA Today

 

Back to April 2014 Archive

CFLA was founded by the Nation's Leading Foreclosure Defense Attorneys back in 2007 to serve the Foreclosure Defense Industry and fight pervasive Bank Fraud. Since opening our virtual doors, CFLA has rapidly expanded to become the premier online legal destination for small businesses and consumers. But as the company continues to grow, we're careful to hold true to our original vision. For us, putting the law within reach of millions of people is more than just a novel idea—it's the founding principle, just ask Andrew P. Lehman, J.D.. With convenient locations in Houston and Los Angeles, you can contact Our National Account Specialist and General Manager / Member Damion W. Emholtz at 888-758-2352 for a free Mortgage Fraud Analysis or to obtain samples of work product, including cutting edge Bloomberg Securitization Audits, Litigation Support, Quiet Title Packages, and for more information about our Nationally Accredited and U.S. Department of Education Approved "Mortgage Securitization Analyst Training Certification" Classes (3 days) 24 hours for approved CLE & MCLE Credit (Now Available Online).

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