Bank Of America Mortgage Fraud Suit Brought By Gov't

By Cornelius Nunev

The mortgage finance market had a lot to do with the financial; meltdown of the past couple of years. Consequently, there have been and will continue to be suits planning to undo a lot of the damage. A recently-filed B of A mortgage fraud lawsuit was filed by the government, seeking $1 billion in damages from fraudulently sold mortgage loans.

Paying more after buy

One of the most egregious actors in the misdoings of the mortgage finance industry is generally held to be Countrywide, which imploded and ultimately had to be purchased by B of A. Since then, Bank of America has been slapped with a number of lawsuits related to the misdeeds of the 2008 addition to the bank's mortgage division.

Another such suit has just been filed by the U.S. Attorney of Manhattan, according to the New York Times, claiming mortgage fraud in a number of loans that Countrywide sold to federally owned but privately-run mortgage insurance houses Freddie Mac and Fannie Mae. The Bank of America mortgage fraud lawsuit seeks $1 billion in problems.

Program the biggest issue

The B of A mortgage fraud suit alleges that before and after Countrywide had been acquired and absorbed into the business, a program known as "High Speed Swim Lane," according to the Washington Post, or "HSSL" or "hustle" was in place that essentially put mortgage loans on the fast track to federal backing without properly vetting the mortgages.

In essence, the program is claimed to have encouraged Countrywide and later Bank of America workers to overlook the quality of the mortgage loans, skipping a verification of the borrower's income or falsifying data and giving bonuses to workers who could get the most mortgage loans lent. The program, according to USA Today, is said to have lasted from 2007 to 2009, after Countrywide had been fully absorbed.

There was a borrower that defaulted within a year when $81,000 in debt was not disclosed on the loan documents. Another borrower was only making $2,666 per month but had written on the loan application $15,500 per month. That person defaulted in seven months. It is the bank's job to make sure all the info is right because that is not Fannie and Freddie's job.

Lies over it

Since Fannie Mae and Freddie Mac have essentially been placed under government conservatorship, the Justice Department is, by virtue of the Bank of America mortgage fraud suit, looking to reclaim $1 billion in losses incurred by the "hustle" program. The Justice Department also contends that the mortgages sold under the "hustle" program should have been repurchased, but B of A failed to do so.

Many people who bought homes with the loans have been foreclosed on, though Bank of America denies any wrongdoing. A 2008 study found that 57 percent of homeowners were in the program and defaulted, according to USA Today.

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