Boston, MA 01/31/2014 (wallstreetpr) – The Government of the U.S. has increased the penalty amount for Bank of America Corp (NYSE:BAC) from $863.6 million to $2.1 billion. On Jan 29, a request was made in a court filing according to which the penalty amount was based on the gross revenue earned by the Bank, the government said. The primary request was in accord with the gross losses that the government funded companies Fannie Mae and Freddie Mac had incurred from loans bought from Countrywide Financial Corp in 2007 and 2008.
Defective mortgages
The case concentrated Bank of America Corp (NYSE:BAC)’s 2008 acquisition of a mortgage lending process at Countrywide, called “Huslte”, or “High Speed Swim Lane”, also known as “HSSL”. These latest updates were made after a jury found that Bank of America was responsible for deception over defective mortgages sold by its Countrywide unit. Earlier in December, in one of the hearings, a judge had asked the Justice Department and the Bank to suggest how he could base the penalties on gains earned by Countrywide instead of the losses which resulted from the sale of the mortgages. This was after a federal jury had in New York, in October, found the bank and a Countrywide’s former mid-level executive, Rebecca Mairone jointly responsible for deception in the civil lawsuit.
Countrywide’s unethical program
The government asserted that Countrywide’s program laid emphasis on the quantity instead of the quality of the loans approved. They also did off with check lists which made sure the loans were in order. However, Mairone and the Bank of America Corp (NYSE:BAC) denied the claims whereby the bank said it was considering its options for an appeal. The bank said that the program which was practiced for several months had ended before the acquisition and hence has nothing to do with the claim. The bank is now due to respond to the government’s motion on Feb 26.
