Wednesday, October 24, 2012

Justice Department Sues Bank of America for $1 Billion

The Department of Justice announced today that it is suing Bank of America for fraud.  In seeking $1 billion from BofA, Justice claims that the bank (and predecessor Countrywide Financial before it) engaged in widespread mortgage fraud through a program known inside the banks as "The Hustle."  The Hustle references Bank of America and Countrywide's effort to fraudulently sell streamlined mortgages to Fannie Mae and Freddie Mac, which were originated through the banks on a streamlined basis, wherein common banking procedures and regulations were ignored.

According to CNN:  "The suit alleges that 'the Hustle' was a nickname for the bank's 'High-Speed Swim Lane' or HSSL program, designed to streamline the mortgage origination process. But the government alleges it was 'intentionally designed to process loans at high speed and without quality checkpoints, and which generated thousands of fraudulent and otherwise defective residential mortgage loans.' The government says the program was started by mortgage lender Countrywide Financial, but continued after it was purchased by Bank of America in 2008."

As the nation continues to struggle under the burden of the mortgage crisis of 2008, the Justice Department in 2012, four years later, is still attempting to sort through the banking fraud that seized the industry during the run-up to the mortgage meltdown.  That a program designed by bankers to streamline the mortgage origination process was nicknamed "The Hustle" by the very bankers that engaged the process is telling.

According to the charge, The Hustle led to "widespread falsification" of mortgage numbers and data by Countrywide Financial.  Further, top federal prosecutor Preet Bharara described the practices of Countrywide executives as "spectacularly brazen in scope."

(photo courtesy of Senseiich, Wikimedia Commons)

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