Judge orders Bank of America to pay $1.2B for Countrywide's sale of faulty loans
Posted Jul 31, 2014 06:32 pm CDT
A federal judge in Manhattan has ordered Bank of America to pay $1.2 billion in civil penalties for defective mortgages sold to Fannie Mae and Freddie Mac.
U.S. District Judge Jed Rakoff ordered the payment in a Wednesday decision after a federal jury determined that Bank of America’s Countrywide unit had engaged in an intentional scheme to misrepresent the quality of its mortgages, the New York Law Journal reports. He also ordered former Countrywide executive Rebecca Mairone to pay $1 million. The Wall Street Journal Law Blog, Reuters and Bloomberg also have stories.
The suit claimed the Countrywide loan program rewarded employees based on the quantity of loans, then failed to disclose loan risks to unwitting buyers.
The case was initiated by a whistleblowing Countrywide executive. The government joined the case in 2012.
Bank of America says the mortgage program ended when it acquired Countrywide in 2008. A spokesperson said the bank was considering its options. A lawyer for Mairone said she didn’t defraud anyone and they will fight to clear her name.