Bank of America will be heading to trial to answer for allegations that it defrauded the U.S. government organizations Fannie Mae and Freddie Mac through Countrywide via its “Hustle” program.
According to Reuters, the government filed suit in 2012 and has claimed that the banking group is responsible for losing Fannie Mae and Freddie Mac over $1 billion as a result of the groups underwriting mortgages that eventually defaulted.
This is the first trial to bring any major bank forward to answer for its involvement in the United States’ financial crisis.
“The people deserve to be compensated by those who have cost them so dearly,” commented James Kauffman, an attorney with the Levin, Papantonio law firm who practices in the areas of business torts, securities, and qui tam or whistleblower litigation. “For too long the corporations and organizations that derailed our economy and then asked the American people to foot the bill have gone without answering for their actions. This trial has the potential to show that the government and the people will not stand for it.”
The current lawsuit was initiated by Edward O’Donnell, a former executive with Countrywide Financial Corp. Lawyers for Countrywide and Bank of America have previously claimed that the allegations of the government are “unfairly prejudicial.”
The bank initiated a program called “Hustle” in 2007 as Fannie Mae and Freddie Mac began tightening their requirements for loan underwriting. The effect of which was the elimination of multiple quality checkpoints in the loan approval process and paying the employees in the program for the quantity of loans they were able to get through the process.
“Complicated litigations like this often go unnoticed for multiple reasons,” Mr. Kauffman continued. “Not the least of which is that without specific information from someone coming forward to make these activities known, the questionable practices of these corporations will continue unchecked.”