Mortgage Fraud Charges May Apply to Bank of America Employees | The Niche Report

Mortgage Fraud Charges May Apply to Bank of America Employees | The Niche Report:

'via Blog this'

Fallout from Countrywide

The lawsuit involves mortgage loans originated by Countrywide Financial Corporation, a lender that became infamous over the poor quality of their subprime lending division. Countrywide was purchased at a time when Bank of America went on an acquisition spree that included investment banking firm Merrill Lynch. The Countrywide acquisition took place in 2008, the same year when the mortgage securitization excesses of the early 21st century came tumbling down and wiped out billions of dollars in equity from Wall Street. 

The Hustle

The DOJ complaint mentions an irrational scheme cooked up by Countrywide in 2007 and continued by Bank of America post-acquisition. The plan went by the colloquial term of “The Hustle” and even adopted a catchy motto: “Loans Move Forward, Never Backward.” DOJ prosecutors claim that the Hustle resulted in a high rate of loan defects, which were concealed by Countrywide when packaging the mortgages for sale to Fannie Mae and Freddie Mac. By late 2008, the damage from these loans required Fannie and Freddie to be bailed out by the government at a deep cost to taxpayers.