Justice: Bank of America Lied About $850M in Mortgage Securities

Justice: Bank of America Lied About $850M in Mortgage SecuritiesBank of America, the nation’s second-largest bank, got hit by a U.S. Justice Department civil lawsuit Tuesday charging mortgage securities fraud.
Justice officials said Bank of America lied to investors about the “relative riskiness” of mortgage loans that backed securities, intentionally not performing proper due diligence and using a disproportionate amount of risky loans originated through third-party mortgage brokers.
The civil complaint filed in U.S. District Court in Charlotte alleges that Bank of America defrauded investors, including federally-insured financial institutions,  that purchased more than $850 million in these mortgage-backed securities.
“Bank of America’s reckless and fraudulent origination and securitization practices in the lead-up to the financial crisis caused significant losses to investors,” said Anne Tompkins, U.S. Attorney for the Western District of North Carolina, where Bank of America is based.
A residential mortgage-backed security (RMBS) is a bond backed by of a pool of residential mortgage loans that were packaged together and sold in different tranches (or risk-levels) to investors.
As alleged in the complaint, Bank of America knew that specific loans in the collateral pool of the RMBSs in question did not materially adhere or comply with Bank of America’s underwriting standards.
These bad loans allegedly had a range of “glaring origination problems” such as overstated income, fake employment, inflated appraisals, wrong loan-to-value ratios, undisclosed debt, occupancy misrepresentation, mortgage fraud and other red flags.

One thought on “Justice: Bank of America Lied About $850M in Mortgage Securities

  • August 6, 2013 at 6:08 pm

    it’s amazing they will file a civil lawsuit to get their money bet Bank Of America want get away with short them on their settlement like all the rest of us in the Independent foreclosure review. still waiting for the 5200.00 still owed to, me by Bank of America

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