Countrywide, the greatest perpetrator of mortgage fraud in
the real estate bubble burst which is still with us, may get
nailed by a U. S. District Court Judge.
We can only hope.
I stopped writing for my mortgage blog, out of despair for getting relief for the people of Michigan from the banks and mortgage companies that were “too big to jail.”
So this goes on my bankruptcy blog.
WHAT DID THEY DO WRONG?
Besides putting people into mortgages they could not afford from day one, lying about folks’ income, inflating the value of homes to get false appraisals so that deals could go through, they ripped off people on the other end of the deals; the ones they sold the crap mortgages too.
What they MAY get nailed for was actually called the Hustle program.
Shayndi Raice of the Wall Street Journal has a good write up:
In October, a jury found the bank and a midlevel executive liable for fraud for a program that the U.S. government alleged misrepresented the quality of loans sold to mortgage-finance firms Fannie MaeFNMA -0.37% and Freddie Mac. FMCC +0.40% (Wall Street Journal on Bank of America fraud)
WHAT MIGHT HAPPEN?
Fannie and Freddie paid $864 million, just for the loans in this program. And that is how much the prosecutor wants the Judge to impose on the bank.
No surprise, the bank lawyer argues for a lesser fine. As in zero.
Kenneth Smurzynski, counsel for Bank of America and a partner with the law firm Williams & Connolly LLP, focused instead on calculating the harm to the victim. He said that there was no evidence that the fraudulent Hustle loans caused monetary losses to Fannie and Freddie because the agencies were able to mitigate their losses and privately settled with Bank of America. (from same WSJ article)
The lawyer for the individual bank employee defendant in the case makes an argument that will provoke either hearty guffaws or stomach wrenching vomiting, depending on your state of mind when you read it:
Marc Mukasey, an attorney for Ms. Mairone and a partner at the law firm Bracewell & Giuliani LLP, said his client already had suffered through bad publicity and a professional career that is in limbo. Ms. Mairone is the “only person that has shed tears over the last few months,” Mr. Mukasey said.
He said she received no personal gain from the Hustle and was “acting the way the entire group was acting.” He said Countrywide was a boy’s club and that Ms. Mairone was targeted as a scapegoat because she was “the new girl.”