Wednesday, October 24, 2012

Bank of America Sued By U.S. for Mortgage Fraud

The U.S. government has sued Bank of America for more than $1 billion. According to Manhattan U.S. Attorney Preet Bharara, Bank of America and Countrywide, which B of A acquired in 2008, developed a procedure to rapidly generate thousands of toxic loans that later defaulted to Fannie Mae and Freddie Mac.

The complaint alleges that during the financial crisis, the bank’s home loan program defrauded the government and encumbered taxpayers by generating thousands of fraudulent or defective loans.

Bank of America itself was being bailed out by U.S. taxpayers during some of the period that the alleged fraud took place. It accepted US$45 billion in funds from October 2008 to January 2009.

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