The government continues to crack down on mortgage schemes today with news breaking that federal prosecutors have sued Bank of America, accusing the massive lender of carrying out a fraudulent home loan program. During the financial crisis, prosecutors say that BOA deceived the government by selling poor loans, without revealing the quality of the loans, to Fannie Mae and Freddie Mac.
All of this dates back to BOA’s acquisition of a struggling mortgage lender, Countrywide Financial, in 2008. Before the buy out, Countrywide Financial was operating a home loan program, called the “hustle”, which was established to churn out as many mortgages as possible without the proper checks and reviews. (If this sounds a lot like robo-signing to you, you are correct.)
Instead of shutting down the “hustle”, or at least putting the appropriate processes in place to qualify the loans, BOA kept the program alive. And later, these mortgages approved through the “hustle” where turned over to Fannie Mae and Freddie Mac, two government-controlled housing giants.
The Justice Department is looking to collect $1 billion from BOA for wrongdoing. While this civil case certainly is not the first of its kind—the government has already mounted several cases against the country’s largest lending institutions—BOA’s “fraudulent conduct alleged in today’s complaint was spectacularly brazen in scope”, said a prosecuting attorney.
We bring you this breaking news to share a current event and because activity occurring on a national scale related to housing typically has a trickle down affect, impacting homeowners in the long run. With the government cracking down on fraudulent lending practices, we hope that strides are simultaneously made to protect homeowners, such as California’s newest Homeowner Bill of Rights.
If you are struggling to understand your rights as a homeowner or are trying to fight foreclosure, please feel free to call McFarlin LLP. We are eager to help.
Source: New York Times