The federal government has been cracking down lately against mortgage fraud in the housing finance market, slapping huge firms with large lawsuits. A recently-filed Bank of America mortgage fraud suit seeks $1 billion in problems for toxic loans sold to Fannie Mae and Freddie Mac.
Acquisition not the very best plan evidently
Countrywide is a mortgage lender that Bank of America acquired when it went under during the recession. It is one of the mortgage companies that were known for making a lot of financial blunders. B of A has been dealing with a ton of lawsuits because of the things the company did.
Another such suit has just been filed by the United States Attorney of Manhattan, according to the New York Times, claiming mortgage fraud in numerous loans that Countrywide sold to federally owned but privately-run mortgage insurance houses Fannie Mae and Freddie Mac. The B of A mortgage fraud suit seeks $1 billion in damages.
Getting federal backing fraudulently
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 mortgages properly, according to the lawsuit.
USA Today explained that the program lasted from 2007 to 2009, according to USA Today, which suggests that it stayed in place after Bank of America took on the business. The idea is that the program would skip verification of the borrower's income and would falsify data to be able to give workers bonuses for getting mortgages.
There was a borrower that defaulted within a year when $81,000 in debt was not disclosed on the loan documents. Another borrower was only making $2,666 per month but had written on the loan application $15,500 per month. That person defaulted in seven months. It is the bank's job to make sure all the data is right because that is not Fannie and Freddie's job.
Lies about this
The Justice Department hopes to get $1 billion in losses from the program from Bank of America since it believes that mortgage loans under the program should have been repurchased but Bank of America did not do that. Freddie and Fannie are under government control right now, which is why they have the right to sue.
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 claims all allegations are false while people are no longer in the homes they bought.
Acquisition not the very best plan evidently
Countrywide is a mortgage lender that Bank of America acquired when it went under during the recession. It is one of the mortgage companies that were known for making a lot of financial blunders. B of A has been dealing with a ton of lawsuits because of the things the company did.
Another such suit has just been filed by the United States Attorney of Manhattan, according to the New York Times, claiming mortgage fraud in numerous loans that Countrywide sold to federally owned but privately-run mortgage insurance houses Fannie Mae and Freddie Mac. The B of A mortgage fraud suit seeks $1 billion in damages.
Getting federal backing fraudulently
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 mortgages properly, according to the lawsuit.
USA Today explained that the program lasted from 2007 to 2009, according to USA Today, which suggests that it stayed in place after Bank of America took on the business. The idea is that the program would skip verification of the borrower's income and would falsify data to be able to give workers bonuses for getting mortgages.
There was a borrower that defaulted within a year when $81,000 in debt was not disclosed on the loan documents. Another borrower was only making $2,666 per month but had written on the loan application $15,500 per month. That person defaulted in seven months. It is the bank's job to make sure all the data is right because that is not Fannie and Freddie's job.
Lies about this
The Justice Department hopes to get $1 billion in losses from the program from Bank of America since it believes that mortgage loans under the program should have been repurchased but Bank of America did not do that. Freddie and Fannie are under government control right now, which is why they have the right to sue.
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 claims all allegations are false while people are no longer in the homes they bought.
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