A fraud verdict against Bank of America and its former Countrywide unit – once a major employer in East Ventura County – has handed the U.S. government a rare victory in a lawsuit that stems from the subprime mortgage meltdown and subsequent financial crisis.
A Manhattan jury on Oct. 23 found Bank of America liable on a single count of fraud. Former Countrywide executive Rebecca Mairone also was found liable.
The charges relate to a Countrywide program called “Hussle” or high-speed swim lane. The program produced millions of dollars in profit for Countrywide as it sold risky home loans to Fannie Mae and Freddie Mac. Countrywide, which had operations throughout East Ventura County, was purchased by Bank of America at the onset of the financial crisis.
According to Reuters, U.S. District Judge Jed Rakoff will decide on how much to penalize the bank. The U.S. Department of Justice has said it would ask Rakoff to award up to $848.2 million, the gross loss it said Fannie and Freddie suffered on the loans.
The case originated as a whistleblower lawsuit but was subsequently joined by the U.S. government. It has been watched closely because very few cases against banks have gone all the way to trial.
Countrywide’s colorful founder Angelo Mozilo and other high-ranking Countrywide executives previously reached settlements with the government.