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DOJ seeks $1B in Bank of America mortgage fraud suit (Read 1933 times)
Oct 18th, 2013 at 8:31pm

gerryS   Offline
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The government states in a $1 billion case that Bank of America and the former Countrywide, absorbed into B of a, sold mortgage fraudulently to Fannie Mae and Freddie Mac. The Bank of America mortgage fraud lawsuit isn't really the first the bank has had to handle, nor likely will it be the last. Source for this article:

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Paying more after purchase



Countrywide is a mortgage lender that B of A acquired when it went under during the recession. It is one of the mortgage businesses that were known for making a ton of monetary blunders. B of A has been dealing with a ton of lawsuits due to the things the business did.



Another such lawsuit has just been filed by the United States Attorney of Manhattan, according to the New York Times, claiming mortgage fraud in a number of loans that Countrywide sold to federally owned but privately-run mortgage insurance houses Fannie Mae and Freddie Mac. The B of A mortgage fraud lawsuit seeks $1 billion in damages.



Program the greatest issue



A “High Speed Swim Lane” was used at Countrywide before it was owned by B of A that put mortgage loans on a fast track to federal backing without actually vetting the mortgage loans properly, according to the lawsuit.



In essence, the program is claimed to have encouraged Countrywide and later Bank of America workers to overlook the quality of the mortgage loans, skipping a verification of the borrower's income or falsifying information and giving bonuses to workers who could get the most mortgage loans lent. The program, according to USA Today, is said to have lasted from 2007 to 2009, after Countrywide had been fully absorbed.



Fannie and Freddie’s job does not entail vetting the loans, which is why the bank is responsible for it. There was one loan made to someone who only made $2,666 per month, though the application said the person was making $15,500 a month. Within seven months, the person defaulted. Another person defaulted within a year after failing to disclose $81,000 in debt.



Deny, deny, deny



The government has the right to sue considering Fannie and Freddie are essentially under government control right now. The Justice Department is upset because Bank of America should have repurchased any loans sold under the program, but the bank failed to do so. That is why the Justice Department wants to get $1 billion in losses.



According to USA Today, a 2008 study showed that 57 percent of homeowners in the program defaulted, and there were a lot in the program. The bank states all allegations are false while people are no longer in the homes they bought.



Sources



New York Times

Washington Post

USA Today
 
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