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Ex-Countrywide Executive Denies Scheme to Mislead Loan Buyers

businessweek.com | October 16, 2013

By Bob Van Voris

A former executive of Bank of America Corp. (BAC:US)’s Countrywide unit testified she wasn’t part of a scheme to defraud Fannie Mae and Freddie Mac (FMCC:US) by selling them thousands of defective loans.

The U.S. sued Bank of America in October, joining a whistle-blower action filed by another former Countrywide executive, Edward O’Donnell. The U.S. claims Bank of America and Countrywide, which the Charlotte, North Carolina-based bank acquired in 2008, sold thousands of defective loans from 2007 to 2009 to the home-mortgage finance companies.

“There was no scheme,” Rebecca Mairone, 46, a defendant in the government’s suit against Bank of America, testified today in Manhattan federal court.

The case is the first brought by the U.S. against a bank over defective mortgages to go to trial. Mairone, the only individual named as a defendant in the case, testified in response to questioning by her lawyer, Marc Mukasey. Mairone said she now works for JPMorgan Chase & Co. (JPM:US)

Countrywide engaged in the fraud to boost profits, making at least $165 million, Assistant U.S. Attorney Pierre Armand told jurors in his opening statements Sept. 24.

Brendan Sullivan, a lawyer for Countrywide, told the jury in his opening statement that while the U.S. claims the loans were faulty, the bank had created a process to speed the approval process of prime loans after it shifted focus away from subprime loans. He said no one at Countrywide had made misrepresentations to Fannie Mae (FNMA:US) or Freddie Mac.

Swim Lane

Government-sponsored entities such as Fannie Mae and Freddie Mac bought single-family mortgages from lenders. The U.S. alleges that to maintain revenue in a “cratering” market for subprime mortgages, a division of Countrywide initiated a loan program called “High Speed Swim Lane” or “HSSL” in August 2007.

O’Donnell testified that he warned Mairone and other Countrywide executives about the failure rate of HSSL loans.

Mairone testified today that Countrywide considered the risks before instituting HSSL and came up with plans to deal with them.

“I felt like we had the proper planning in place in case something went wrong,” she said.

The case is U.S. v. Countrywide Financial Corp., 1:12-cv-01422, U.S. District Court, Southern District of New York (Manhattan).

 

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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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