The Countrywide Financial mortgage lender unit now owed by Bank of America Corp. was found liable for selling thousands of defective loans by a federal jury in New York..
Countrywide, a leading lender during the housing boom, originated or bought about $1.4 trillion in mortgages between 2005 and 2007. Bank of America acquired the Calabasas firm in 2008.
The jury said the Charlotte, N.C. bank was liable for the sale of faulty loans by Countrywide. The civil suit focused on a Countrywide initiative to have its loan officers churn out our mortgages quickly, with limited focus on the mortgage holders ability to repay the loans.
“In a rush to feed at the trough of easy mortgage money on the eve of the financial crisis, Bank of America purchased Countrywide, thinking it had gobbled up a cash cow,” said Preet Bharara, U.S. for the Southern District of New York, in lauding the unanimous jury decision on Wednesday.
The jury also ruled that former Countrywide executive Rebecca Mairone liable for the fraud. She currently works for Bank of America.
U.S. District Judge Jed Rakoff will decide on any penalties at a later date. The U.S. Attorney’s office originally sought about $848 million in damages due to the losses incurred by Fannie May and Freddie Mac in the fraud.
Judge Rakoff set a Dec. 5 hearing for further arguments regarding the penalty. He expects to rule by Dec. 31.
Bank of America still operates a mortgage lending unit at the former Calabasas headquarters on Park Granada Boulevard.