Boston, MA 11/04/2013 (wallstreetpr) – The verdict is out and with it, Bank of America Corp (NYSE:BAC) has been found guilty of defrauding Fannie Mae by selling it thousands of defective loans in a first case of its kind brought by the US government. It is not only Bank of America that is facing the axe buts its former Countrywide Financial Corp executive Rebecca Mairone was also found liable of defrauding the US. The penalty to be imposed on the case will be decided on a later date according to the US District judge Jed Rakoff. Bank of America may be fined up to $848 million if suggestions by the assistant US Attorney Pierre Armand are to come to pass.
The US assistant is representing Fannie Mae and Freddie Mac in the lawsuit. The other option could see the federal judge imposing a fine of $131 million an estimated amount of losses that the two entities enjoined in the case recorded as a result of countrywide actions. Dec 5 has been marked as the date when further arguments will be heard before the final verdict is made on Dec 31. Bank of America had purchased Countrywide in 2008 which was US largest home lender with a purchasing order of about $1.4 trillion in mortgages as from 2005-2007.
Bank of America had purchased Countrywide thinking it had purchased a cash cow not knowing its profits were entirely built on fraud. The jury entirely made of six women and four men came into a consensus agreement that Countrywide had offered substandard loans to Fannie Mae under its HSSL program. Countrywide had earned profits totaling $165 million through its HSSL program that enabled the company maintain high revenue collections. Under the HSSL program it only took a maximum of 10 days to process loans from the normal 60 days. This resulted in more than 28800 substandard loans being issued to different entities.
