Attorneys for the U.S. Attorney’s Office in Manhattan are squaring off against Bank of America’s lawyers in a massive lawsuit in which the banking behemoth’s Countrywide predecessor is accused of underwriting and selling toxic mortgages to Fannie Mae and Freddie Mac.
Pierre Armand is an attorney in the civil division of the U.S. Attorney’s Office in Manhattan. Armand calls Countrywide’s business model one in which quality suffered under profiteering and which resulted in massive fraud that cost the two former government-sponsored entities dearly while making Countryside $165 million selling the loans.
“Hustle was not about quality,” Armand said. “It was about speed. It was about volume. It was about profits.”
Countrywide’s loan program, implemented in 2007, went under various names: the “High Speed Swim Lane,” “HSSL” or “Hustle.” HSSL was overseen by Rebecca Mairone, a former chief operating officer of Countrywide’s Full Spectrum Lending division. Mairone is a co-defendant in the lawsuit who currently works at JPMorgan Chase & Co. and is being defended by Bracewell & Giuliani.
The government’s lawsuit was filed under the Financial Institutions Reform, Recovery, and Enforcement Act, which was passed following savings-and-loan frauds and scandals that occurred during the early 1980s. It blames Countrywide (now Bank of America) for the losses borne by Fannie Mae and Freddie Mac on thousands of supposedly prime mortgages that later defaulted, causing losses of $131 million to Fannie Mae and Freddie Mac.
Bank of America’s attorney is Brendan Sullivan, who countered that Countrywide had quality control in place as well as systems to prevent fraud. “No fraud,” he said. “Two words. That’s the heart and soul and body of the defense. No fraud. And that’s what the evidence will show.”
The case is U.S. ex rel. O’Donnell v. Bank of America Corp et al, U.S. District Court, Southern District of New York, No. 12-01422. It is being heard in front of U.S. District Judge Jed Rakoff.
Read the original article in the Chicago Tribune.