Bank of America escapes $1.3B mortgage fraud penalty Federal appeals court throws out 2013 verdict on sale of toxic mortgages to Fannie and Freddie
Bank of America is off the hook for a $1.27 billion fraud penalty for its Countrywide Financial division’s role in selling toxic mortgages to Fannie Mae and Freddie Mac in the buildup to the 2008 financial crisis.
On Monday, a Manhattan federal appeals court overturned a 2013 jury verdict that found Countrywide, which Bank of America acquired in 2008, fraudulently dumped the shoddy mortgages on the government-sponsored entities despite having promised to sell only investment-quality loans.
But the three-judge appeals court panel found that Countrywide did上海夜网 not engage in fraud because the sale of the toxic mortgages occurred after the contract on the deal was signed – with Judge Richard Wesley noting that “[a] party claiming fraud must prove fraudulent intent at the time on contract execution,” according to the New York Post.
Inst新上海贵族宝贝论坛 ead, Wesley said Countrywide’s substitution of th爱上海同城手机版 e promised high-quality mortgages for shoddy loans was more akin to breach of contract than fraud, and that prosecutors would have to prove that Countrywide executives made the switch “with contemporaneous fraudulent intent.”
The appeals court also overturned a $1 million civil penalty on former Countrywide executive Rebecca Mairone, who was told by subordinates that the loans being sold to 爱上海同城论坛 Fannie Mae and Freddie Mac fell short of t[……]Continue Reading