NEW YORK - (Mealey's) The U.S. government on Oct. 24 filed a $1
billion lawsuit against Bank of America Corp., as successor for
Countrywide Financial Corp., alleging that Countrywide violated
provisions of the False Claims Act by engaging in a scheme to defraud
Fannie Mae and Freddie Mac in connection with Countrywide's residential
mortgage lending business (United States of America v. Bank of America Corp., et al., No. 12-1422, S.D. N.Y.).
The complaint was filed by U.S. Attorney for the Southern District of
New York Preet Bharara in the U.S. District Court for the Southern
District of New York and names Bank of America and Bank of America N.A.
(collectively, Bank of America), as successor to Countrywide Financial
Corp. and Countrywide Home Loans (collectively, Countrywide), as
The government alleges that Countrywide engaged in a scheme to
defraud Fannie Mae and Freddie Mac by "rolling out a new 'streamlined'
loan origination model call the 'Hustle,'" in which it "eliminated every
significant checkpoint on loan quality and compensated its employees
solely based on the volume of loans originated, leading to rampant
instances of fraud and other serious loan defects, all while Countrywide
was informing [Fannie Mae and Freddie Mac] that it had tightened its
"When the loans predictably defaulted, [Fannie Mae and Freddie Mac]
incurred more than one billion dollars in unreimbursed losses," the
The government seeks to recover treble damages and penalties under
the False Claims Act and civil penalties under the Financial
Institutions Reform, Recovery and Enforcement Act.
The government is represented by Bharara and Assistant U.S.
Attorneys for the Southern District of New York Pierre G. Armand and
Jaimie L. Nawaday in New York.
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