Bank of America seeks to void verdict in $1.27 billion ‘Hustle’ case
Bank of America Corp on Thursday asked a federal judge to throw out a jury verdict finding it liable for fraud over defective mortgages sold by its Countrywide unit that resulted in a $1.27 billion penalty.
Bank of America said prosecutors were required at trial to prove that loans originated by Countrywide Financial Corp in a process called “Hustle” that were then sold to government mortgage finance giants Fannie Mae and Freddie Mac were not as good as the lender represented.
“The trial evidence, even viewed in the light most favorable to the government, did not prove fraud under this standard,” the bank’s lawyers wrote.
The motion came a week after Bank of America agreed to a record $16.65 billion settlement with the U.S. government to settle charges that it and companies it bought misled investors into buying troubled mortgage-backed securities.
The lawsuit centered on a program called the “High Speed Swim Lane” – also called HSSL or Hustle – that the government said began in 2007 at Countrywide, which Bank of America acquired in 2008.
The government said the program emphasized quantity over quality, rewarding employees for producing more loans and eliminating checkpoints designed to ensure the loans’ quality.
In a decision last month, Rakoff ordered Bank of America to pay $1.27 billion and Mairone to pay $1 million.
Source: Reuters
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