Democracy Gone Astray

Democracy, being a human construct, needs to be thought of as directionality rather than an object. As such, to understand it requires not so much a description of existing structures and/or other related phenomena but a declaration of intentionality.
This blog aims at creating labeled lists of published infringements of such intentionality, of points in time where democracy strays from its intended directionality. In addition to outright infringements, this blog also collects important contemporary information and/or discussions that impact our socio-political landscape.

All the posts here were published in the electronic media – main-stream as well as fringe, and maintain links to the original texts.

[NOTE: Due to changes I haven't caught on time in the blogging software, all of the 'Original Article' links were nullified between September 11, 2012 and December 11, 2012. My apologies.]

Wednesday, October 24, 2012

Bank Of America Mortgage Fraud: Feds Sue For Over $1 Billion Alleging Multi-Year Scheme

Federal prosecutors sued Bank of America for $1 billion on Wednesday, alleging that the bank's former Countrywide unit concocted a mortgage scheme it called the "Hustle" in order to sell thousands of fraudulent and otherwise defective mortgage loans to Fannie Mae and Freddie Mac.

"In order to increase the speed at which it originated and sold loans ... Countrywide eliminated every single checkpoint on loan quality and compensated its employees solely based on the volume of loans originated," the lawsuit, filed in Manhattan federal district court, alleges.

This led to "rampant instances of fraud and other serious loan defects," all while Countrywide was telling Fannie Mae and Freddie Mac, which buy up mortgages for resale, that it had strengthened its lending requirements.

The mortgage giant called the scheme the "High Speed Swim Lane" or the "Hustle," for short, according to the lawsuit.

When the loans "predictably" defaulted, Fannie and Freddie, which in 2008 required a massive taxpayer bailout due in large part to the purchase of toxic mortgages, incurred more than $1 billion in losses, the lawsuit says.

The mortgage scheme continued through 2009, well after Bank of America acquired Countrywide, according to the lawsuit.

Bank of America did not immediately respond to a request for comment.

The lawsuit, which alleges violations of civil and not criminal law, comes on the heels of several other high-profile cases tied to the financial crisis that have been filed this month by federal and state law enforcement officials, who have taken fire for not aggressively pursuing those responsible for the mortgage crisis.

Earlier this month, New York Attorney General Eric Schneiderman sued Bear Stearns, now a unit of JPMorgan Chase, accusing it of stuffing mortgage bonds with bad loans without informing investors of the risk.

A week later, the Department of Justice sued Wells Fargo, claiming the bank lied about the quality of thousands of loans it certified for a federal insurance program. Both of those cases are pending.

Original Article
Source: huffington post
Author:  Ben Hallman 

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