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Ho hum – just another billion dollar fine for a bank

July 31st, 2014

Another day and another ruling against a bank for fraudulent practices. A New York judge has ruled that¬†Bank of America’s Countrywide business must pay the US government $1.3bn for selling defective home loans.¬†Former Countrywide executive Rebecca Mairone must also pay $1m.

A BBC report says Countrywide was found guilty of selling bad loans, as part of a programme called “hustle”, to US mortgage giants Fannie Mae and Freddie Mac in 2007.

Bank of America has spent nearly $40bn on legal matters relating to the housing market collapse, and the bank is expected to announce a multi-billion dollar settlement with US regulators over similar charges in the coming weeks.

The “hustle” suit came about after Edward O’Donnell, a former Countrywide executive, issued a whistleblower complaint alleging fraud.

Mr O’Donnell said a programme Countrywide instituted in 2007 known internally as the “high-speed swim lane” (also known as “HSSL” or “hustle”) did not properly screen mortgage applications, and that employees – who were paid based on loan volume and speed of processing – were give incentives to approve loans.

The programme was overseen by Ms Mairone.


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