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U.S. Federal Judge Jed S. Rakoff said Bank of America was 'driven by hunger for profits and oblivious to harms' when it sold the defective mortgages to Fannie Mae and Freddie Mac

valuewalk.com | July 31, 2014

United States Judge Jed S. Rakoff of the Federal District Court In Manhattan ordered Bank of America Corp (NYSE:BAC) to pay $1.3 billion penalty after a jury found that Countrywide Financial was guilty of selling the defective mortgage loans to the GSEs in the run-up to the 2008 financial crisis.

Bank of America ‘driven by hunger for profits’

Judge Rakoff is known for his strong position on financial fraud. In his ruling, he wrote criticized the bank for its misconduct. According to him, Bank of America Corp (NYSE:BAC) was “driven by a hunger for profits and oblivious to the harms thereby visited, not just on the immediate victims, but also on the financial system as a whole. He added, “It was from start to finish the vehicle for a brazen fraud by the defendants.”

According to Judge Rakoff, he did not compute the penalty imposed to Bank of America Corp (NYSE:BAC) based on the amount of losses incurred by Fannie Mae / Federal National Mortgage Assctn Fnni Me (OTCBB:FNMA) and Freddie Mac / Federal Home Loan Mortgage Corp (OTCBB:FMCC) from the mortgages.

He said the calculated the penalty based on the price they paid for mortgages proven defective by prosecutors to the jury—approximately 42% out of the total 17,611 loans.

Bank of America Corp (NYSE:BAC) is required to pay the full $1.3 billion penalty by September.

Observers in the financial industry suggested that the penalty will likely complicate the settlement negotiations between the bank and the Department of Justice (DOJ) to prevent a different lawsuit related to the sale of mortgage securities that cost investors billions of dollars in losses.

Countrywide’s top manager to pay $1 million penalty

Rebecca Mairone, a top manager at Countrywide Financial, was also found responsible for selling thousands of defective loans to the GSEs. Judge Rakoff ordered her to pay $1 million in penalty.

According to the Judge Rakoff, Mairone could pay the penalty in an installment basis over a period. In his decision, he indicated a concern that a demand for Mairone to pay a lump sum “would restrain her resources to the limit.”

 

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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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