The federal government has been cracking down recently against mortgage fraud in the housing finance sector, slapping large firms with huge suits. A recently-filed B of A mortgage fraud suit seeks $1 billion in problems for toxic loans sold to Freddie Mac and Fannie Mae.
Getting Countrywide a consequence
Countrywide is a mortgage lender that B of A bought when it went under during the recession. It is one of the mortgage businesses that were known for making a lot of monetary blunders. B of A has been dealing with a ton of lawsuits because of the things the business did.
Countrywide sold a ton of loans to Freddie Mac and Fannie Mae, which is why another suit from the United States Attorney of Manhattan is requesting $1 billion in problems from the bank. Evidently, there was a ton of mortgage fraud that occurred during that time, according to the New York Times.
Hustle and flow
A "High Speed Swim Lane" was used at Countrywide before it was owned by Bank of America that put mortgages on a fast track to federal backing without actually vetting the mortgages properly, according to the lawsuit.
In essence, the program is alleged to have encouraged Countrywide and later B of A employees to overlook the quality of the mortgages, skipping a verification of the borrower's income or falsifying info and giving bonuses to employees who could get the most mortgage loans lent. The program, according to USA Today, is said to have lasted from 2007 to 2009, after Countrywide had been fully absorbed.
Fannie and Freddie's job does not entail vetting the loans, which is why the bank is responsible for it. There was one loan made to someone who only made $2,666 per month, though the application said the individual was making $15,500 a month. Within seven months, the person defaulted. Another person defaulted within a year after failing to disclose $81,000 in debt.
Claiming it was a lie
Since Freddie Mac and Fannie Mae have essentially been placed under government conservatorship, the Justice Department is, by virtue of the Bank of America mortgage fraud suit, looking to reclaim $1 billion in losses incurred by the "hustle" program. The Justice Department also contends that the mortgage loans sold under the "hustle" program should have been repurchased, but Bank of America unsuccessful to do so.
According to USA Today, a 2008 study showed that 57 percent of homeowners in the program defaulted, and there were a lot in the program. The bank states all allegations are false while people are no longer in the homes they bought.
Getting Countrywide a consequence
Countrywide is a mortgage lender that B of A bought when it went under during the recession. It is one of the mortgage businesses that were known for making a lot of monetary blunders. B of A has been dealing with a ton of lawsuits because of the things the business did.
Countrywide sold a ton of loans to Freddie Mac and Fannie Mae, which is why another suit from the United States Attorney of Manhattan is requesting $1 billion in problems from the bank. Evidently, there was a ton of mortgage fraud that occurred during that time, according to the New York Times.
Hustle and flow
A "High Speed Swim Lane" was used at Countrywide before it was owned by Bank of America that put mortgages on a fast track to federal backing without actually vetting the mortgages properly, according to the lawsuit.
In essence, the program is alleged to have encouraged Countrywide and later B of A employees to overlook the quality of the mortgages, skipping a verification of the borrower's income or falsifying info and giving bonuses to employees who could get the most mortgage loans lent. The program, according to USA Today, is said to have lasted from 2007 to 2009, after Countrywide had been fully absorbed.
Fannie and Freddie's job does not entail vetting the loans, which is why the bank is responsible for it. There was one loan made to someone who only made $2,666 per month, though the application said the individual was making $15,500 a month. Within seven months, the person defaulted. Another person defaulted within a year after failing to disclose $81,000 in debt.
Claiming it was a lie
Since Freddie Mac and Fannie Mae have essentially been placed under government conservatorship, the Justice Department is, by virtue of the Bank of America mortgage fraud suit, looking to reclaim $1 billion in losses incurred by the "hustle" program. The Justice Department also contends that the mortgage loans sold under the "hustle" program should have been repurchased, but Bank of America unsuccessful to do so.
According to USA Today, a 2008 study showed that 57 percent of homeowners in the program defaulted, and there were a lot in the program. The bank states all allegations are false while people are no longer in the homes they bought.
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