Bank of America found liable in mortgage fraud case

[JURIST] A jury in the US District Court for the Southern District of New York [official website] on Wednesday found Bank of America (BOA) [corporate website] liable [press release] for fraudulently making bad loans and for removing quality checks for those loans. Also implicated in the verdict are Countrywide (a subdivision of Bank of America) and senior executive Rebecca Mairone. The verdict comes one year to the day after the filing [JURIST report] of the suit. The case dealt [Reuters report] with Countrywide's origination and sale of unstable home loans to government mortgage companies Fannie Mae and Freddie Mac. The Department of Justice (DOJ) has indicated that it will seek up to $848.2 million, the amount of the losses suffered by Fannie Mae and Freddie Mac on the deal. Though the jury has returned its verdict, Judge Jed Rakoff has yet to determine the actual amount of damages. December 5 has been set as the date for arguments on how penalties should be assessed. BOA has continued to declare its innocence in the matter and has indicated that it is evaluating its options to appeal the verdict.

The effort to hold banking giants liable for their roles in mortgage fraud and the ensuing financial crisis has been ongoing. JPMorgan Chase & Co. settled [JURIST report] a case with the DOJ on Monday in the amount of $13 billion. The effort against BOA itself is also ongoing [JURIST report]. The DOJ filed another suit in August in the US District Court for the Western District of North Carolina for similar fraud amounting to more than $850 million. In January BOA settled a separate claim [JURIST report] brought by Fannie Mae over its lending practices for $10 billion. BOA has elected to settle other claims as well, such as the class-action suit brought [JURIST report] by Merrill Lynch in 2012, with the settlement agreement amounting to $2.43 billion. In all, claims arising from BOA's role in the 2007-2008 financial crisis have already cost the corporation several billion dollars, with more claims and suits still to be adjudicated or settled.

 

About Paper Chase

Paper Chase is JURIST's real-time legal news service, powered by a team of 30 law student reporters and editors led by law professor Bernard Hibbitts at the University of Pittsburgh School of Law. As an educational service, Paper Chase is dedicated to presenting important legal news and materials rapidly, objectively and intelligibly in an accessible format.

© Copyright JURIST Legal News and Research Services, Inc., 2013.