Certified Forensic Loan Auditors, LLC

 
  Upcoming Classes

Search CFLA's Article Archive:

U.S. Government Mortgage Fraud Lawsuit Against BofA Headed to Trial

* Judge refuses to dismiss suit, finds "factual disputes"

* Bank says believes there was no fraud

* Jury trial scheduled to begin Sept. 23

reuters.com | August 29, 2013

By Jonathan Stempel

NEW YORK, Aug 27 (Reuters) - A U.S. government lawsuit accusing Bank of America Corp of fraud in the sale of billions of dollars of toxic mortgage loans to Fannie Mae and Freddie Mac is on track to go to trial next month after a judge rejected the bank's bid to dismiss the case.

In an order made public on Tuesday, U.S. District Judge Jed Rakoff in Manhattan said there were "genuine factual disputes" that justify letting the case continue against the second-largest U.S. bank.

The order clears the way for the case to proceed toward a scheduled Sept. 23 jury trial. Only a few prominent cases tied to the financial crisis have ever gone to trial.

Rakoff also said he expects to decide before trial which theories he will allow the government to pursue. He said he would explain his reasons for Tuesday's order "in due course."

The U.S. Department of Justice sued Bank of America last October, joining a whistleblower lawsuit originally brought by former Countrywide Financial Corp executive Edward O'Donnell.

It alleged that Countrywide, acquired by Bank of America in July 2008, caused more than $1 billion of taxpayer losses by selling defective home loans to Fannie Mae and Freddie Mac, the mortgage financiers seized by the government in September 2008.

The government said the loans went through a program called the "High Speed Swim Lane" - also known as "HSSL" and "Hustle" - that Countrywide devised in 2007 to speed up loan processing, even if it meant ignoring safeguards to help ensure that loans were sound and not tainted by fraud.

Bank of America, in court papers, countered that HSSL was a "legitimate and good-faith effort" to develop systems for making prime loans after the collapse of the subprime market.

A Bank of America spokesman, Lawrence Grayson, said after Rakoff issued his order, "This program ended before our purchase of Countrywide, as the government acknowledges. We believe there was no fraud."

At an Aug. 13 hearing, Rakoff signaled that the government could take its case against Bank of America and former Countrywide executive Rebecca Mairone to a jury.

"The government's theory in part has always been that the defendants, through their own internal processes, covered up how defective the loans were and made them appear - even for the purposes of their ultimate internal figures, let alone what they represented to others - less defective than they were," Rakoff said. "That may be right, that may be wrong."

CHALLENGE FOR CEO MOYNIHAN

While Bank of America Chief Executive Brian Moynihan has made major strides in resolving litigation tied to the financial crisis, with the bank having already agreed to pay more than $45 billion, the lawsuit makes clear his work is far from done.

Indeed, the Charlotte, North Carolina-based lender was hit just three weeks ago with lawsuits by the Justice Department and the Securities and Exchange Commission alleging fraud in an $850 million mortgage debt sale in early 2008.

In the case before Rakoff, Bank of America was sued under the federal False Claims Act and the Financial Institutions Reform, Recovery and Enforcement Act (FIRREA), a 1989 federal law passed in the wake of that decade's savings-and-loan crisis.

FIRREA has a lower burden of proof and longer statute of limitations than other laws often used in financial fraud cases.

Earlier this month, Rakoff endorsed a broad interpretation of FIRREA. He has also taken a tough line in SEC cases against banks, initially rejecting a Bank of America settlement over Merrill, and rejecting a separate accord with Citigroup Inc because that bank did not admit wrongdoing.

"Admitting it did something wrong could have preclusive effects in subsequent private civil litigation or parallel litigation involving the government, so the bank needs to tread carefully," David Freeman Engstrom, an associate professor at Stanford Law School, said in an interview about Bank of America. "Rolling the dice and going to trial may be more attractive."

The case is U.S. ex rel. O'Donnell v. Bank of America Corp et al, U.S. District Court, Southern District of New York, No. 12-01422.

 

Back to August 2013 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).

SEE BELOW- http://www.certifiedforensicloanauditors.com

Call us toll free at 888-758-2352

Bookmark and Share
spacer
Facebook Like us on Facebook
Twitter Follow us on Twitter
YouTube View our YouTube Videos
LinkedIn Connect to us on Linkedin
 
BBB Logo

 

spacer
Contact us or view our Sample Documents & Audits by completing the form below.

  • Reload
  • Should be Empty:


 

DVD Sets Only $99

 

FREE Mortgage Fraud Analysis

 

Order Cutting-Edge Services Now

 

Quiet Title Packages from Licensed Attorneys

 

Affiliate Services

 

CFLA Sponsored Attorney Links

 

Take-Home Education Package

 

ALB Law Firm

 

Advocate Legal

 

The True News Network

 

Sutton Law Firm, P.L.L.C.

 

Rubenstein Business Law

 

Atighechi Law Group

 

Scunziano & Associates

 

Get Certified to Perform Mortgage Securitization Audits

 

CFLA Training Academy

 

Expert Witness Services

 

Cutting Edge Expert Securitization Reports

 

CFLA Credit Cards

 

Breaking News

 

Letters to the Editor

 

CFLA Weekly Newsletters

 

Code of Ethics

 

Testimonials

 

Instructional Videos

 

Job Opportunities

 

License Opportunities

 

MARS Rule

 

Product Samples

 

Resource Links

 

Servicer Information

 

Foreclosure Laws

 

REST Report

 

Quiet Title Packages from Licensed Attorneys

 

Advertise on CFLA

 

Advertising Space: Mortgage Securitization, Quiet Title

 

Certified Forensic Loan Auditors, LLC
13101 West Washington Blvd.
Suite 444
Los Angeles, CA 90066

Phone: 832-932-3951
Toll Free: 888-758-CFLA (2352)
Mobile Users: CLICK TO CALL
info@certifiedforensicloanauditors.com

   
 
CFLA IS NOT A LAW FIRM AND DOES NOT PROVIDE ANY LEGAL ADVICE. CFLA DOES NOT OFFER FORECLOSURE CONSULTING OR FORECLOSURE RELIEF
SERVICES. CFLA DOES NOT OFFER OR ASSIST WITH ANY LOAN MODIFICATION SERVICE. CFLA ALWAYS RECOMMENDS THAT CLIENTS RETAIN COMPETENT COUNSEL IN THEIR RESPECTIVE JURISDICTION. CFLA HAS A FREE PROGRAM TO REFER CFLA CLIENTS TO LAW FIRMS IN NEARLY EVERY STATE AND CFLA
DOES NOT CHARGE OR OBTAIN REFERRALS FEES FOR THESE SERVICES. SERVICES NOT OFFERED TO RESIDENTS OF THE STATE OF NEVADA.

 
Home About Us Privacy Policy Terms of Service Disclaimer SERVICES Careers Contact Us
 
COPYRIGHT © 2007-2016 Certified Forensic Loan Auditors ™ All rights reserved