Bank of America Sued Over Mortgage Fraud
(NEW YORK) -- Federal prosecutors in New York sued Bank of America Wednesday, alleging that the bank defrauded the government at the height of the mortgage crisis.
This is the latest legal problem stemming from Bank of America's acquisition of Countrywide and it could be the costliest.
It was called the "Hustle," a program Bank of America started in 2008 to process mortgages at high speed and high volume. To do it, federal prosecutors in New York say Bank of America eliminated quality controls and relied on clerks who were unqualified, inexperienced and told to put quantity over quality.
The result, court records say, were defective loans sold to Fannie Mae and Freddie Mac even though Bank of America knew they didn't meet their standards. When those loans defaulted, prosecutors say, it caused more than a billion dollars in losses and "countless foreclosures."
Prosecutors called it "spectacularly brazen" for Countrywide and Bank of America to make disastrous loans and stick taxpayers with the bill.
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