Bank of America and Countrywide Found Liable of Mortgage Fraud in Case Filed by U.S. Government
Countrywide Judge Considers $166 Million Fraud Penalty
U.S. District Judge Jed Rakoff in Manhattan heard arguments today over the size of the penalty he should impose on Bank of America and former Countrywide executive Rebecca Mairone. Rakoff asked lawyers for the bank and the U.S. government to submit briefs on the amount gained from the fraud, which the government said may be $165.8 million.
The government claims Countrywide committed a “simple but brazen” fraud by misrepresenting risky loans processed through its High Speed Swim Lane or “HSSL” program as being of investment quality.
The case was brought under the Financial Institution Reform, Recovery and Enforcement Act of 1989, or FIRREA. That statute and another law has been used by Manhattan U.S. Attorney Preet Bharara’s office at least six times to obtain almost $500 million in mortgage fraud recoveries.
Under the statute, the penalty can’t exceed the amount of gain or loss from a violation.
Rakoff said he will issue a ruling on the penalty in February.
The case is U.S. v. Countrywide Financial Corp., 12-cv-01422, U.S. District Court, Southern District of New York (Manhattan).
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