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Federal Government Sues Bank of America for Fraud reports LoanSaver

(, November 12, 2012 ) Victoria, Australia- The federal government has sued the Bank of America, the nation’s largest bank, over an alleged mortgage-fraud scheme it claims caused over $1 billion in losses for federal mortgage guarantors Fannie Mae and Freddie Mac.

The civil suit filed in federal court in Manhattan charges Bank of America with using a high-speed loan origination process from which safeguards against fraud, misstatements or other misconduct had been removed. The lawsuit says the scheme was started Countrywide Financial and Countrywide Home Loans by 2007, but continued for at least another year after Bank of America acquired Countrywide in 2008.

Citing Countrywide internal documents, the lawsuit says the bank’s HSSL program, short for “High Speed Swim Lane” and referred to as the “Hustle” program, aimed to have loan applications “move forward, never backward," and to strip out any "toll gates" capable of impeding the process.

Federal litigators charge the “Hustle” program produced defective mortgage loans, which went into default after Bank of America sold them to the federal mortgage guaranty agencies. The hustle helped produced thousands of foreclosures and over $1 billion in losses.

The court filing also claims Countrywide executives had clear reason to know the program was producing defective loans. The bank’s own review in January 2008 of loan quality found that 57% of "Hustle" loans had gone into default. But rather than notify Fannie Mae and Freddie Mac of the known problems, Countrywide covered them up.

The lawsuit was filed by Manhattan U.S. Attorney Preet Bharara, whose office has five other lawsuits charging major banks with unsound mortgage practices that contributed to the housing meltdown.

At a press conference, Bharara charged that Countrywide and Bank of America “made disastrously bad loans and stuck taxpayers with the bill.” He charged the banks “systematically removed every check in favor of its own balance -– they cast aside underwriters, eliminated quality controls, incentivized unqualified personnel to cut corners and concealed the resulting defects.”

A Bank of America spokesman denied the allegations, claiming it had “stepped up and acted responsibly to resolve legacy mortgage matters." He also added, “"At some point, Bank of America can't be expected to compensate every entity that claims losses that actually were caused by the economic downturn."

Bank of America also faces a separate lawsuit brought by a coalition of fair housing agencies which charges that the bank wrongly failed to keep up and market foreclosed houses in black and Latino areas.

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Albert Jenkins

1300 796 850

Source: EmailWire.Com

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