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Bank of America sued for $1 billion for allegedly selling toxic home loans
Bank of America sued for $1 billion (€769 million) for allegedly selling thousands of toxic home loans to government agencies Fannie Mae and Freddie Mac.
Countrywide Financial, which Bank of America bought in 2008, is accused of selling thousands of toxic home loans to Fannie Mae and Freddie Mac.
The civil lawsuit has been brought by the US Attorney Preet Bharara, the top federal prosecutor in Manhattan, New York.
He accuses Countrywide Financial, which Bank of America bought in 2008, of selling thousands of toxic home loans to Fannie Mae and Freddie Mac.
Fannie Mae and Freddie Mac are government agencies that support the US mortgage market.
Bank of America has yet to comment.
Countrywide Financial is accused of running a trading scheme from 2007 to 2009 that was deliberately designed to process loans at high speed without checks on their quality.
US Attorney Bharara announced that "this lawsuit should send another clear message that reckless lending practices will not be tolerated," and added that that Countrywide's practices were "spectacularly brazen in scope."
The legal action against Bank of America follows similar moves by the US government earlier this month against Wells Fargo and JP Morgan Chase.
On 2 October, JP Morgan was sued for allegedly defrauding investors who lost more than $20 billion (€15.4 million) on mortgage-backed securities sold by Bear Stearns.
JP Morgan, which bought the investment bank in March 2008, said the allegations related to actions at Bear Stearns prior to its takeover.
Meanwhile, on 10 October, Wells Fargo was also sued by federal authorities for alleged mortgage fraud.
The US government alleges that Wells Fargo lied about the quality of mortgages it handled, leading to huge losses for the Federal Housing Administration.
Wells Fargo has however denied the allegations.
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The mortgage finance industry had a lot to do with the monetary; meltdown of the past couple of years. As a result, there have been and will continue to be lawsuits seeking to undo some of the damage. A recently-filed Bank of America mortgage fraud lawsuit was filed by the government, seeking $1 billion in problems from fraudulently sold mortgage loans. Check more The mortgage finance industry had a lot to do with the monetary; meltdown of the past couple of years. As a result, there have been and will continue to be lawsuits seeking to undo some of the damage. A recently-filed Bank of America mortgage fraud lawsuit was filed by the government, seeking $1 billion in problems from fraudulently sold mortgage loans. Check more here.
