Thursday, July 31, 2014

Judge to Bank of America: Pay Up $1.3 Billion for Hustle Fraud

Posted By on Thu, Jul 31, 2014 at 8:44 AM

In one of the largest fines in recent history, Bank of America has been slapped with a $1.3 billion penalty from a federal judge in connection with the so-called "Hustle" mortgage program.

Following a jury verdict, U.S. District Judge Jed Rakoff ordered the nation's second's largest U.S. bank to cough up the cash for its role in a fraud over shoddy mortgages sold by the former Countrywide Financial Corp.

Only one individual was charged in the scam—former Countrywide executive Rebecca Mairone—who was also found guilty and ordered to pay $1 million.

The U.S. Department of Justice actually sought a $2.1 billion fine in the Hustle scam, which included expedited loans through a "High Speed Swim Lane" and then sold off to Fannie Mae and Freddie Mac, backed by public funds. Bank of America assumed full legal responsibility of the loans and the program when it purchased Countrywide Financial in 2008. That purchase has caused Bank of America tens of billions of dollars in litigation, loan buybacks and writedowns.

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