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U.S. Seeks New Hearing in Countrywide 'Hustle' Appeals Case

bloomberg.com | August 5, 2016

By Andrew M Harris

The U.S. asked a federal appeals court to reconsider its May decision to toss out an almost $1.3 billion judgment against Bank of America Corp.’s Countrywide Financial unit, claiming the panel overlooked “a wealth of evidence.”

The government won the award after a 2013 trial at which jurors found the company defrauded mortgage-lending financiers Freddie Mac and Fannie Mae by selling them thousands of defective loans. The petition was filed Thursday at the U.S. Court of Appeals in New York.

U.S. lawyers had alleged that Countrywide generated thousands of defective loans and sold them to the two home-mortgage finance companies. Countrywide sold the loans to boost revenue in the tightening credit market in mid-2007, according to evidence presented by the U.S. at trial. The program called the "High Speed Swim Lane," or the “Hustle” ran until 2008.

On appeal, bank lawyers argued the evidence produced at trial by the U.S. had failed to prove its case. The three-judge appellate panel agreed, saying the government’s proof didn’t sustain the alleged intent to commit fraud. The judges also threw out a $1 million penalty against a Countrywide executive who oversaw the “Hustle.”

“In reversing the jury’s verdict, the Court overlooked a wealth of evidence presented at trial that defendants made fraudulent misrepresentations at the time each loan was sold,” according to the filing by Manhattan U.S. Attorney Preet Bharara.

Countrywide, then based in Calabasas, California, was once the biggest U.S. residential home lender, originating or purchasing about $1.4 trillion in mortgages from 2005 to 2007. The bulk of them were sold to investors as mortgage-backed securities. Bank of America acquired the company in 2008.

Lawrence Grayson, a spokesman for Charlotte, North Carolina-based lender, declined to comment on the filing.

The case is U.S. v. Countrywide Home Loans Inc., 15-496, U.S. Court of Appeals, Second Circuit (New York).

 

 

 

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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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