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Bank of America Liable For Bad Mortgages

It seems JPMorgan Chase isn’t the only bad boy on the banking block.

A New York jury says Bank of America is liable for selling bad mortgages to Fannie Mae and Freddie Mac.

The bank’s Countrywide Financial unit was accused of approving unqualified buyers for mortgages and then selling those faulty loans to the government-owned mortgage giants.

Those loans resulted in more than $1 billion in losses when they inevitably failed.

The lawsuit provides seven examples of mortgages that falsified the borrowers’ income or other qualifications.

One of those applications claimed the home buyer was an airline sales representative earning $15,500 per month. In fact, the borrower earned $2,666 a month working for a temp agency and defaulted in less than a year.

Countrywide had apparently created a program dubbed the “Hustle,” which aimed for quantity over quality and rewarded sales staff for how quickly they could push loans through the application process.

Bank of America became responsible for Countrywide and all its reckless lending when it made one of the worst corporate acquisitions in the history of capitalism and purchased the mortgage company in 2008.

The Charlotte, N.C.-based bank has already paid somewhere around $50 billion in fines and settlements for Countrywide’s fraudulent activities, notes The New York Times.

Although the U.S. Department of Justice is only seeking an $848 million settlement in this case, it could open the door to a number of new class-action lawsuits that will keep the bank’s legal bills mounting.

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