U.S. sues Bank Of America for $1 Billion for misrepresenting quality of home loans

The United States is seeking $1 billion in damages from Bank Of America for allegations the bank misrepresented the quality of home loans it sold to mortgage investors Fannie May and Freddie Mac. Bank of America bought Countrywide which the government says “dismembered quality control and checks on loan quality,” a process called “the hustle” which was designed to increase the speed at which it originated and sold loans to the companies. The mortgage unit fraudulently said that the loans qualified for insurance from Fannie Mae and Freddie Mac, the complaint alleges. The government brought the suit under the False Claims Act which has become a favored law to seek accountability from banks. Last month, Bank of America agreed to pay $2.43 billion to settle claims it misled investors about the acquisition of the brokerage firm Merrill Lynch & Co.

Jeffrey Newman represents whistleblowers. jeffrey.newman1@gmail.com