Bank of America's Countrywide Unit Ordered to Pay $1.3B in Bad-Mortgages 'Hustle' Case

Bank of America and its Countrywide Financial Corp. unit is still paying for its wrongdoing in the toxic-mortgage buildup to the financial crisis.

A judged ordered Bank of America to pay nearly $1.3 billion Wednesday for a program dubbed “Hustle” that fueled big losses to federally-backed mortgage finance giants Fannie Mae and Freddie Mac.
U.S. District Judge Jed Rakoff imposed the fine on the Countrywide Financial unit, which oversaw the program also known as “The High Speed Swim Lane.”
The judge also ordered Rebecca Mairone, a bank employee that helped run the loan program, to pay $1 million for her role.
The financial penalties arose from an October 2013 civil verdict by a Manhattan federal court jury that found Countrywide financially liable for Hustle, which allegedly processed thousands of mortgage applications at high speed with little checking for fraud, misrepresentations or other deficiencies. The jury also found Mairone liable.
Charlotte, N.C.-based Bank of America, the nation’s second-largest bank, acquired Countrywide in July 2008 during the initial fallout from the financial crisis and housing market meltown.
Countrywide created Hustle in 2007 as the real estate market started to collapse and the market for sub-prime mortgage loans dried up.
Judge Rakoff’s decision this week could complicate Bank of America’s negotiations with the Justice Department in a separate, larger case over mortgage securities the bank sold to investors in the run-up to the financial crisis.

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