When Bank of America bought mortgage lender Countrywide in 2008, it thought “it had gobbled up a cash cow,” says U.S. Attorney Preet Bharara, but profits from the lender’s “High Speed Swim Lane” program (known inside the company as “the Hustle”) were “built on fraud.”
Bharara’s comments came after Bank of America and the bank’s Countrywide Financial unit were found liable for millions of losses on mortgages they sold to Fannie Mae and Freddie Mac. The jury in the civil proceeding also determined that former Countrywide executive Rebecca Mairone committed fraud. Now a U.S. District Court judge will determine civil costs to be paid by the bank.
Bank of America said it’s evaluating its options for appealing the decision, which concerned “a single Countrywide program that lasted several months and ended before Bank of America’s acquisition of the company.”
“The Hustle” program was created in 2007 to help Countrywide originate more prime mortgage loans that it could sell to Fannie Mae and Freddie Mac, after the secondary market for subprime loans not guaranteed by Fannie, Freddie or Ginnie Mae collapsed. Source: usatoday.com