Bank of America was recently fined $1 billion for fraudulent mortgages sold to Fannie Mae and Freddie Mac plus civil mortgage fraud Wednesday. The allegations include the surpassing of all loan “slowdowns” in their “Hustle” system, including quality control nd mortgage quality checking during the national financial crisis of 2007 to 2009.
The federally backed mortgage buyers Fannie Mae and Freddie Mac had at least $ 1 billion in losses for “defaulted” mortgages sold by Countrywide Financial and Country Wide Home Loans, which were picked up by Bank of America after buying Countrywide’s operations in 2008.
U.S. Attorneys made a 46-page complaint against Bank of America stating allegations that they removed underwriters, quality controls and urged many unqualified personnel to ensure that they gained more profit after selling the labeled “good loans” to nationalized mortgage buyers.
“Hustle” was a system that compensated Countrywide employees with incentives based on the number of mortgages they sold, not based on the quality of mortgages that ultimately removed the calculation of loan integrity. Unqualified employees were given critical underwriting tasks and even answered borrower questions regarding the deals.
Bank of America’s shares dropped to $9.31 after the news of the lawsuit was publicly released, down five cents. Shares began to rise up again in the after-hours
Source: USA Today
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