Bloomberg the Company & Products

Bloomberg Anywhere Login

Bloomberg

Connecting decision makers to a dynamic network of information, people and ideas, Bloomberg quickly and accurately delivers business and financial information, news and insight around the world.

Company

Financial Products

Enterprise Products

Media

Customer Support

  • Americas

    +1 212 318 2000

  • Europe, Middle East, & Africa

    +44 20 7330 7500

  • Asia Pacific

    +65 6212 1000

Communications

Industry Products

Media Services

Follow Us

Bank of America Must Face Mortgage Fraud Trial: Judge

Don't Miss Out —
Follow us on:

Aug. 27 (Bloomberg) -- Bank of America Corp. must face a trial next month in a lawsuit alleging the bank’s Countrywide unit defrauded Fannie Mae and Freddie Mac by selling them billions of dollars in bad mortgages, a federal judge ruled.

U.S. District Judge Jed Rakoff in Manhattan issued a ruling today rejecting the bank’s request to dismiss the case, putting it on track for a trial scheduled to begin Sept. 23.

“The court concludes that there remain genuine factual disputes that, on at least one or more of the government’s theories, precludes the granting of summary judgment to any defendant,” Rakoff said in a one-page order, saying he would file a full opinion at a later date.

The U.S. sued Bank of America in October, intervening in a whistle-blower action originally filed by a former Countrywide executive, Edward O’Donnell. The U.S. claimed Bank of America and Countrywide, which it acquired in 2008, sold thousands of defective loans from 2007 to 2009 to the home-mortgage finance companies.

The government alleged Countrywide engaged in a “host of irresponsible origination practices that prioritize funding speed and discourage scrutiny and quality into a singularly risky loan manufacturing process that pumped out large quantities of poor quality loans,” according to a memorandum filed in July.

“This program ended before our purchase of Countrywide, as the government acknowledges,” said Lawrence Grayson, a spokesman for Charlotte, North Carolina-based Bank of America. “We believe there was no fraud.”

The case is U.S. v. Countrywide Financial Corp., 12-cv-01422, U.S. District Court, Southern District of New York (Manhattan).

To contact the reporter on this story: Christie Smythe in federal court in New York at csmythe1@bloomberg.net

To contact the editors responsible for this story: Michael Hytha at mhytha@bloomberg.net

Please upgrade your Browser

Your browser is out-of-date. Please download one of these excellent browsers:

Chrome, Firefox, Safari, Opera or Internet Explorer.