October 24, 2013

Bank of America found liable for mortgage fraud

The trial involved mortgages the government said were sold without regard to quality as the economy slid.

The Associated Press

NEW YORK — Bank of America Corp., accused of lying about the quality of mortgages it passed along to financial firms Fannie Mae and Freddie Mac, was found liable for fraud on Wednesday in a civil case that the government said captured the frenzied pursuit of profits at all costs just before the economy collapsed in 2008.

A Manhattan jury returned its verdict after a month-long trial focusing on prime mortgages that Bank of America’s Countrywide Financial unit completed in late 2007 and 2008. U.S. District Judge Jed S. Rakoff said he would determine on Thursday when a penalty phase will begin.

The verdict was returned against Bank of America, Countrywide and a former executive, Rebecca Mairone. Bank of America, which had denied there was fraud, said it was evaluating its options for appeal.

“The jury’s decision concerned a single Countrywide program that lasted several months and ended before Bank of America’s acquisition of the company,” a bank spokesman said.

The trial related to mortgages the government said were sold at break-neck speed without regard to quality as the economy headed into a tailspin.

The government had accused the financial institutions of urging workers to churn out loans, accept fudged applications and hide ballooning defaults.

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