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US Seeking Maximum Penalty Of $864 Million From BofA Over Countrywide Loans

rttnews.com | November 11, 2013

The U.S. government is seeking the maximum penalty of $864 million, allowed under the law, from financial services major Bank of America (BAC: Quote) in connection with a Countrywide loan program dubbed "Hustle" that ran between August 2007 and April 2008.

The maximum penalty was sought after a federal jury in Manhattan federal court last month found Bank of America liable for fraud over the sale of thousands of defective mortgages by its Countrywide unit to government-sponsored enterprises, or GSEs, Fannie Mae (FNMA) and Freddie Mac (FMCC). The jury also found former Countrywide Financial executive Rebecca Mairone liable for fraud for assisting in the program. The US government has alleged that Countrywide systematically removed quality controls in order to speed up the program in its endeavor to boost profits at a time that the market for subprime loans was beginning to collapse.

The final determination on the amount of penalty will be made by the presiding US District Judge Jed Rakoff at a later date. Further arguments on the case have been scheduled for December 5. The penalty could also be as low as about $131 million, which is the estimated loss to Fannie Mae and Freddie Mac on the purchases.

The Federal Housing Finance Agency or FHFA, took over Freddie Mac and Fannie Mae (FINA), two government-backed finance companies in 2008, after they were bailed out by the government. FHFA is now the regulator and conservator of Fannie Mae and Freddie Mac and the regulator of the 12 Federal Home Loan Banks.

The mortgage-backed securities were sold Countrywide Financial Corp., which was acquired by Bank of America in 2008. The bank has already said to have spent about $50 billion on legal expenses linked to the acquisition.

BAC closed Friday's regular trading session at $14.32, up $0.52 or 3.77% on a volume of 158.23 million shares.


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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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