Bank of America Corp. asked a federal judge to throw out the jury verdict that its Countrywide unit defrauded Fannie Mae (FNMA) and Freddie Mac, which resulted in a $1.3 billion civil penalty against the bank.
The trial evidence showed that the quality of the so-called High Speed Swim Lane mortgages Countrywide sold to Fannie and Freddie in 2007 and 2008 was “well within” the standards the companies expected, the bank said in its request today in federal court in Manhattan.
Countrywide and Rebecca Mairone, a former executive with the mortgage lender, were found liable by a jury in October in the first mortgage-fraud case brought by the federal government to go to trial. The Obama administration is using a 25-year-old anti-fraud statute to seek civil penalties from companies and individuals it deems responsible for the 2008 subprime crisis.
“The evidence unambiguously showed that the HSSL loans sold to Fannie and Freddie were well within industry standards for loan quality, and thus Fannie and Freddie received exactly what they paid for,” the Charlotte, North Carolina-based bank said in today’s filing.
U.S. District Judge Jed Rakoff on July 30 ordered Countrywide to pay a $1.3 billion penalty under the Financial Institutions Reform, Recovery and Enforcement Act, the 1989 law under which the Justice Department sued Countrywide and which provides for civil penalties for criminal violations.
At the trial, the government argued Countrywide committed a “simple but brazen” fraud by misrepresenting risky loans processed in 2007 and 2008 through its High Speed Swim Lane program as being of investment quality. The U.S. said Countrywide issued defective mortgages under the program and then sold them to Fannie and Freddie.
No comments:
Post a Comment