The U.S. Justice Department is suing Bank of America over alleged mortgage fraud perpetrated against Fannie Mae and Freddie Mac by Countrywide, the giant mortgage originator that Bank of America purchased.
The government's complaint seeks damages and civil penalties under the False Claims Act and the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 for engaging in a scheme to defraud the two GSEs, according to an announcement from
Preet Bharara, the United States Attorney for the Southern District of New York, Steve A. Linick, the Inspector General of the Federal Housing Finance Agency), and Christy L. Romero, the Special Inspector General for the Troubled Asset Relief Program. Specifically, the complaint alleges that from at least 2007 through 2009, Countrywide and Bank of America implemented a new loan origination process called the "Hustle," which was intentionally designed to process loans at high speed and without quality checkpoints, and which generated thousands of fraudulent and otherwise defective residential mortgage loans sold to Fannie Mae and Freddie Mac that later defaulted, causing over $1 billion in losses and countless foreclosures.
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