Fine line

29 Oct 2013 By Reynolds Holding

The mega-bank faces a hefty fine after being found liable for selling dodgy loans to Fannie and Freddie. Just how large is anyone’s guess, given the loose legal guidelines involved. U.S. Judge Jed Rakoff will make the final call, but Breakingviews attempts its own calculation.

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A U.S. district court jury on Oct. 23 found Bank of America liable for fraud over faulty mortgages sold by its Countrywide unit to Fannie Mae and Freddie Mac. Countrywide originated the home loans in an accelerated process called “Hustle.” Former Countrywide executive Rebecca Mairone was also found liable for fraud.
The Justice Department said it would seek up to $848.2 million, Fannie and Freddie’s alleged gross loss on the loans. U.S. District Judge Jed Rakoff will decide the penalty, with arguments set for Dec 5.

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