The federal government has been cracking down lately against mortgage fraud in the housing finance industry, slapping enormous firms with huge lawsuits. A recently-filed B of A mortgage fraud suit seeks $1 billion in problems for toxic loans sold to Freddie Mac and Fannie Mae.
Punishing Bank of America for purchase
One of the most egregious actors in the misdoings of the mortgage finance market is generally held to be Countrywide, which imploded and ultimately had to be purchased by B of A. Since then, B of a has been slapped with a number of lawsuits linked to the misdeeds of the 2008 addition to the bank's mortgage division.
According to the New York Times, another lawsuit was just filed by the United States Lawyer of Manhattan claiming $1 billion in problems. Evidently, countrywide sold a number of loans to Freddie Mac and Fannie Mae fraudulently.
Hustle and flow
The B of A mortgage fraud lawsuit states that before and after Countrywide had been acquired and absorbed into the company, a program known as "High Speed Swim Lane," according to the Washington Post, or "HSSL" or "hustle" was in place that essentially put mortgage loans on the fast track to federal backing without properly vetting the mortgages.
The program is alleged to have paid workers bonuses if they were willing to overlook quality of the mortgage and skip verification of income. They were even encouraged to falsify data if it meant giving out mortgage loans. According to USA Today, the program is suspected of occurring from 2007 to 2009, well after B of A took over the business.
One applicant, in Miami, was said to be earning $15,500 per month but was later discovered to really be making $2,666 per month, and ended up defaulting in seven months. Another applicant's $81,000 in debt wasn't disclosed in documents and received a mortgage they defaulted on within a year. Freddie and Fannie didn't vet the mortgage loans before purchasing, relying on Countrywide and later Bank of America's word.
Deny, deny, deny
Since Fannie Mae and Freddie Mac have essentially been placed under government conservatorship, the Justice Department is, by virtue of the B of A mortgage fraud suit, seeking 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 B of A failed to do so.
A lot of people who bought homes with the loans have been foreclosed on, though B of A denies any wrongdoing. A 2008 study found that 57 percent of homeowners were in the program and defaulted, according to USA Today.
Punishing Bank of America for purchase
One of the most egregious actors in the misdoings of the mortgage finance market is generally held to be Countrywide, which imploded and ultimately had to be purchased by B of A. Since then, B of a has been slapped with a number of lawsuits linked to the misdeeds of the 2008 addition to the bank's mortgage division.
According to the New York Times, another lawsuit was just filed by the United States Lawyer of Manhattan claiming $1 billion in problems. Evidently, countrywide sold a number of loans to Freddie Mac and Fannie Mae fraudulently.
Hustle and flow
The B of A mortgage fraud lawsuit states that before and after Countrywide had been acquired and absorbed into the company, a program known as "High Speed Swim Lane," according to the Washington Post, or "HSSL" or "hustle" was in place that essentially put mortgage loans on the fast track to federal backing without properly vetting the mortgages.
The program is alleged to have paid workers bonuses if they were willing to overlook quality of the mortgage and skip verification of income. They were even encouraged to falsify data if it meant giving out mortgage loans. According to USA Today, the program is suspected of occurring from 2007 to 2009, well after B of A took over the business.
One applicant, in Miami, was said to be earning $15,500 per month but was later discovered to really be making $2,666 per month, and ended up defaulting in seven months. Another applicant's $81,000 in debt wasn't disclosed in documents and received a mortgage they defaulted on within a year. Freddie and Fannie didn't vet the mortgage loans before purchasing, relying on Countrywide and later Bank of America's word.
Deny, deny, deny
Since Fannie Mae and Freddie Mac have essentially been placed under government conservatorship, the Justice Department is, by virtue of the B of A mortgage fraud suit, seeking 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 B of A failed to do so.
A lot of people who bought homes with the loans have been foreclosed on, though B of A denies any wrongdoing. A 2008 study found that 57 percent of homeowners were in the program and defaulted, according to USA Today.
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