Bloomberg reports that Bank of America’s Countrywide unit was found liable by a jury in Manhattan federal court last month for selling the government-sponsored entities thousands of defective loans in the first mortgage-fraud case brought by the U.S. to go to trial.
The bank’s fraud was 'simple but brazen', prosecutors wrote in a court filing last night. 'They made bad loans and they knowingly sold those bad loans as good loans to cheat Fannie Mae and Freddie Mac out of money'.
Given the measure of Countrywide’s culpability, the public injury and the bank’s ability to pay, the government said the maximum penalty under the law was warranted -- the gross loss suffered by the entities under the scheme.
U.S. District Judge Jed Rakoff, who presided over the trial, told lawyers last month he would determine the amount of any penalty at a later date. Arguments in the matter are scheduled for 5th December.
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