It’s good news that federal prosecutors today filed a $1 billion-plus lawsuit against the Bank of America Corp.
The lawsuit alleges that from at least 2007 through 2009, Countrywide Financial and Countrywide Home Loans, and later Bank of America after acquiring Countrywide in 2008, carried out a new loan process called the High Speed Swim Lane or “Hustle.”
The Hustle was intentionally designed to process loans at high speed and without quality checkpoints, the lawsuit said. The purpose was to generate thousands of fraudulent and defective residential mortgage loans sold to Fannie Mae and Freddie Mac that later defaulted, causing more than $1 billion dollars in losses and thousands of foreclosures.
This is the first civil fraud suit brought by the Department of Justice on mortgage loans sold to Fannie Mae and Freddie Mac.
“For the sixth time in less than 18 months, this office has been compelled to sue a major U.S. bank for reckless mortgage practices in the lead-up to the financial crisis,” Manhattan U.S. Attorney Preet Bharara said in a statement.
Steve A. Linick, inspector general of the Federal Housing Finance Agency, which oversees Fannie Mae and Freddie Mac, said Countrywide and Bank of America allegedly engaged in fraudulent behavior that contributed to the financial crisis, which ultimately fell on the shoulders of taxpayers.
Bharara said the lawsuit is aimed at recouping some of the money taxpayers paid to bail out the financially troubled Fannie Mae and Freddie Mac.
I applaud this action. For years, I’ve wanted to see those who caused the financial crisis brought to justice for their reprehensible conduct.