February 5, 2014 View entire issue of ANO         Close 

Government Increases BofA Penalty by More Than $1 Billion

The federal government increased by more than $1 billion the penalty amount it’s seeking from Bank of America for selling defective mortgages through its Countrywide unit, Reuters reported Jan. 30.

After a jury found the bank liable for fraud this past October, the U.S. Department of Justice requested $863.6 million, a figure based on losses suffered by Fannie Mae and Freddie Mac from loans purchased from Countrywide Financial in 2007 and 2008.

The government’s amended request seeks a $2.1 billion penalty, which is based on Countrywide’s gains from the sale of those mortgages. The Justice Department claimed Countrywide earned $165.2 million selling its bad loans.

“This claim bears no relation to the limited Countrywide program that lasted several months and ended before Bank of America's acquisition of the company,” Lawrence Grayson, spokesman for the bank, told Reuters.

The Countrywide program to which he referred is the fast-track mortgage lending process known as the “High-Speed Swim Lane,” for which the jury found the bank liable.

Bank of America already has shelled out some $45 billion to settle disputes resulting from the 2008 financial crisis.

Oral arguments on the penalty case will start March 13, Reuters reported.

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