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Mortgage Fraud Charges May Apply to Bank of America Employees

thenichereport.comOct 27, 2012

By Rick Roque

(TheNicheReport) — The ongoing civil fraud case against Bank of America for allegedly selling toxic mortgage assets to government-sponsored mortgage investment companies could target individuals and bank employees. Prosecutors from the U.S. Department of Justice (DOJ) stated that the complaint against Bank of America for its alleged role in passing more than $1 billion in worthless loans to Fannie Mae and Freddie Mac could be amended to include present and former employees.

 

Fallout from Countrywide

The lawsuit involves mortgage loans originated by Countrywide Financial Corporation, a lender that became infamous over the poor quality of their subprime lending division. Countrywide was purchased at a time when Bank of America went on an acquisition spree that included investment banking firm Merrill Lynch. The Countrywide acquisition took place in 2008, the same year when the mortgage securitization excesses of the early 21st century came tumbling down and wiped out billions of dollars in equity from Wall Street. 

 

The Hustle

The DOJ complaint mentions an irrational scheme cooked up by Countrywide in 2007 and continued by Bank of America post-acquisition. The plan went by the colloquial term of “The Hustle” and even adopted a catchy motto: “Loans Move Forward, Never Backward.” DOJ prosecutors claim that the Hustle resulted in a high rate of loan defects, which were concealed by Countrywide when packaging the mortgages for sale to Fannie Mae and Freddie Mac. By late 2008, the damage from these loans required Fannie and Freddie to be bailed out by the government at a deep cost to taxpayers. 

 

The False Claims Act

DOJ prosecutors have until the end of the year to amend the complaint and include the names of the individuals to be prosecuted for civil fraud charges. This lawsuit would not be the first time the False Claims Act is used to charge individuals in mortgage fraud cases. The Federal Housing Finance Agency filed over a dozen lawsuits in 2011 against 130 individuals on behalf of Fannie and Freddie.

The False Claims Act has already been used against Bank of America. Earlier this year, the bank agreed to a $1 billion settlement for its alleged role in passing bad mortgage loans to the Federal Housing Administration.


Back to October 2012 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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