WASHINGTON (7/31/14)--Bank of America is the subject of a court order to pay a penalty in excess of $1.27 million in a case that charges that subprime lender Countrywide disguised risks associated with some of the mortgages it sold to the government-sponsored housing enterprises, Freddie Mac and Fannie Mae. A jury found Countrywide at fault.
According to Politico, Countrywide, which was acquired by BofA, was found to be disguising risky loans sold to Fannie and Freddie during 2007 and 2008, the years spanning the height of the country's financial crisis. The July 30 article noted that BofA and federal prosecutors have disagreed over the size of its fine, how many loans were actually sold through the so-called "hustle" scheme, and what amount of losses were realized.
Politico also reported that former Countrywide executive Rebecca Mairone, who was found to be involved in the scheme, separately was ordered to pay a civil penalty of $1 million, according to the order from U.S. District Judge in New York Jed Rakoff.
A BoA spokesperson was quoted as saying that the million-dollar plus penalty is out of line with a "limited" Countrywide program that lasted "several months" and ended before BoA's acquisition.