Bank of America sued for mortgage fraud

The Justice Department is bringing a lawsuit against Bank of America for selling defective mortgages. The bank is being sued for $1 billion for a program that was allegedly nicknamed “The Hustle.” The Justice Department is stating that the so-called High Speed Swim Lane program was “intentionally designed to process loans at high speed and without quality checkpoints, and generated thousands of fraudulent and otherwise defective residential mortgage loans.” These mortgages were purchased by Fannie Mae and Freddie Mac, a finance firm which was backed by the government at the time, and they resulted in $1 billion in losses of taxpayer money and thousands of foreclosures. The “Hustle” program was formulated by Countrywide Financial but was purchased and continued by Bank of America in 2008. US Attorney Preet Bharara called the program “spectacularly brazen.” “Countrywide and Bank of America…cast aside underwriters, eliminated quality controls, incentivized unqualified personnel to cut corners, and concealed the resulting defects,” said Bharara. “These toxic products were then sold to the government-sponsored enterprises as good loans. This lawsuit should send another clear message that reckless lending practices will not be tolerated.” Last year Bank of America agreed on an $8.5 billion settlement with other investors. In this case however the government is getting involved because it is the first case involving Fannie and Freddie, the firms whose losses prompted a government takeover. Bank of America itself accepted $45 billion in government bailout funds between October 2008 and January 2009. In spite of all this, Bank of America still earned a net income of $2.4 billion within January to September of this year.