BofA wins mortgage fight over Freddie Mac and Fannie Mae claims

Bank of America

Bank of America’s decision to fight government allegations that it defrauded Fannie Mae and Freddie Mac paid off as a federal appeals court threw out a judgment of almost $1.3bn against the bank.

Bloomberg News reports that BofA’s Countrywide Financial unit was the first bank to be found at fault at trial by a federal jury for selling defective mortgage loans under a decades-old statute enacted during the savings-and-loans crisis. The civil fraud suit was one of several brought against banks by Manhattan U.S. Attorney Preet Bharara using the law.

A 2013 jury verdict finding the bank liable and a $1.27bn penalty imposed by the trial judge were tossed by a federal appeals court in New York, which ruled on Monday that the government failed to prove the bank intended to defraud Fannie and Freddie when it sold them the mortgages. The court also threw out a $1m penalty against Rebecca Mairone, a former executive who oversaw the creation of a program called the “Hustle,” which sped up loan processing.

“This case was a massive government overreach from inception,” Josh Rosenkranz, who represented Mairone in her appeal, said on Monday. “The government tried to take an allegation of a garden-variety breach of contract case and turn it into a fraud, with crushing and career-ending penalties.”

To access the complete Bloomberg News article hit the link below:

BofA $1.3 Billion ‘Hustle’ Judgment Tossed by Appeals Court

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