U.S. Sues Bank of America Over Alleged ‘Hustle’ Mortgage Fraud

October 24, 2012

The United States filed a civil mortgage fraud lawsuit against Bank of America Corp., accusing it of selling thousands of toxic home loans that later defaulted to Fannie Mae and Freddie Mac, leading to more than $1 billion of losses.

U.S. Attorney Preet Bharara in Manhattan said the scheme, known as the “Hustle” — a modification of “HSSL,” which stood for “High-Speed Swim Lane” — was invented in 2007 by Countrywide Financial Corp., which Bank of America bought the following year, and lasted through 2009.

He said the scheme was deliberately designed to process loans at high speed without checks on their quality, and resulted in “countless” foreclosures.

Bank of America did not immediately respond to requests for comment.

Wednesday’s lawsuit seeks triple damages under the federal False Claims Act, as well as civil penalties.

The case is the U.S. Department of Justice’s first civil fraud lawsuit over mortgage loans sold to Fannie Mae or Freddie Mac. Bharara said it is his office’s sixth lawsuit in the last 1-1/2 years against a major U.S. bank over alleged reckless mortgage practices leading up to the recent financial crisis.

Federal regulators seized Fannie Mae and Freddie Mac on Sept. 7, 2008 and put them into a conservatorship.

In afternoon trading, Bank of America shares were up 9 cents at $9.45 on the New York Stock Exchange.

The case is U.S. ex rel. O’Donnell v. Bank of America Corp et al, U.S, District Court, Southern District of New York, No. 12-01422.

Topics Lawsuits USA Fraud

Was this article valuable?

Here are more articles you may enjoy.

Latest Comments

  • October 24, 2012 at 5:01 pm
    Agent says:
    Hi Sargent. You are right about this, but let's not forget about the venerable Chris Dodd who got a sweetheart loan from Countrywide as well and is co-author of the insidious... read more
  • October 24, 2012 at 4:34 pm
    Sargent Major says:
    The real escapee here is Angilo Mozilo who was the head of Countrywide and was the primary driver of the housing collapse from the lender side. On the Gov side it has to be Ba... read more
  • October 24, 2012 at 4:07 pm
    Agent says:
    Buffet recently pumped a few billion into Bank of America thinking he could rescue them from themselves. I don't see the culture changing with this bank since they just loane... read more

Add a CommentSee All Comments (3)Add a Comment

Your email address will not be published. Required fields are marked *

*

More News
More News Features