Ramping up an aggressive stance against mega-banks whose lending practices caused billions of dollars of losses to the taxpayer through Fannie Mae and Freddie Mac, the US Department of Justice has filed suit against Bank of America for $1 billion due to mortgage fraud. Fannie Mae and Freddie Mac are large financial institutions, backed by the federal government, that purchase loans from banks in the secondary market.
The U.S. Attorney for the Southern District of New York filed the suit. Its target is the “Hustle” loan program that originated with Countrywide Financial but was taken over when Bank of America purchased Countrywide in 2008. “Hustle” loans were named for Countrywide’s “High-Speed Swim Lane” (HSSL) program that was created ostensibly to streamline loans. U.S. Attorney Preet Bharara’s office charges that HSSL was “intentionally designed to process loans at high speed and without quality checkpoints, and which generated thousands of fraudulent and otherwise defective residential mortgage loans.”
Read more about this landmark lawsuit on CNN and the press release for the U.S. Attorney for the Southern District of New York website.