This will never repair the damage caused by these scams!

(illustration: Occupy Our Homes)

Bank of America Found Guilty of Mortgage Fraud

By Reuters

24 October 13

• Bank found liable on one civil fraud charge


• Verdict seen as a major win for the U.S. govt


• Former Countrywide exec found liable on one fraud charge

ank of America Corp was found liable for fraud on Wednesday over defective mortgages sold by its Countrywide unit, a major win for the U.S. government in one of the few trials stemming from the financial crisis.

 

After a four-week trial, a federal jury in New York found the bank liable on one civil fraud charge. Countrywide originated shoddy home loans in a process called "Hustle" and sold them to government mortgage giants Fannie Mae and Freddie Mac, the government said.

 

The four men and six women on the jury also found former Countrywide executive Rebecca Mairone liable on the one fraud charge she faced.

 

The U.S. Justice Department has said it would seek up to $848.2 million, the gross loss it said Fannie and Freddie suffered on the loans. But it will be up to U.S. District Judge Jed Rakoff to decide on the penalty. Arguments on how the judge will assess penalties are set for Dec. 5.

 

Any penalty would add to the more than $40 billion Bank of America has spent on disputes stemming from the 2008 financial crisis.

 

"The jury's decision concerned a single Countrywide program that lasted several months and ended before Bank of America's acquisition of the company," Bank of America spokesman Lawrence Grayson said. "We will evaluate our options for appeal."

 

Marc Mukasey, a lawyer for Mairone, called his client a "woman of integrity, ethics and honesty," adding they would fight on. "She never engaged in fraud, because there was no fraud," he said.

Wednesday's verdict was a major victory for the Justice Department, which has been criticized for failing to hold banks and executives accountable for their roles in the events leading up to the financial crisis.

 

The government continues to investigate banks for conduct related to the financial crisis. The verdict comes as the government is negotiating a $13 billion settlement with JPMorgan Chase & Co to resolve a number of probes and claims arising from its mortgage business, including the sale of mortgage bonds.

 

Risky Loans

 

The lawsuit stemmed from a whistleblower case originally brought by Edward O'Donnell, a former Countrywide executive who stands to earn up to $1.6 million for his role.

 

The case centered on a program called the "High Speed Swim Lane" - also called "HSSL" or "Hustle" - that government lawyers said Countrywide started in 2007.

 

The Justice Department contended that fraud and other defects were rampant in HSSL loans because Countrywide eliminated loan-quality checkpoints and paid employees based on loan volume and speed.

 

The Justice Department said the process was overseen by Mairone, a former chief operating officer of Countrywide's Full Spectrum Lending division. Mairone is now a managing director at JPMorgan.

Amy Bonitatibus, a JPMorgan spokeswoman, said, "We are reviewing the decision."

 

About 43 percent of the loans sold to the mortgage giants were materially defective, the government said.

 

Bank of America bought Countrywide in July 2008. Two months later, the government took over Fannie and Freddie.

 

Bank of America and Mairone denied wrongdoing. Lawyers for the bank sought to show the jury that Countrywide had tried to ensure it was issuing quality loans and that no fraud occurred.

 

The lawsuit was the first financial crisis-related case against a bank by the Justice Department to go to trial under the Financial Institutions Reform, Recovery, and Enforcement Act (FIRREA).

 

The law, passed in the wake of the 1980s savings-and-loan scandals, covers fraud affecting federally insured financial institutions.

 

The Justice Department, and particularly lawyers in the office of U.S. Attorney Preet Bharara in the Southern District of New York, have sought to dust off the rarely used law and bring cases against banks accused of fraud.

 

Among its attractions, FIRREA provides a statute of limitations of 10 years and allows the government to bring civil cases for alleged criminal wrongdoing.

 

Virginia Gibson, a lawyer at the law firm Hogan Lovells, said the Bank of America verdict was a "big deal because it shows the scope of a tool the government has not used frequently since its inception."

 

Gibson and other lawyers say any appeal by Bank of America would likely focus on a ruling made by the judge before the trial that endorsed a government position that it can bring a FIRREA case against a bank when the bank itself was the financial institution affected by the fraud.

 

The case was one of three lawsuits in New York where judges had endorsed that interpretation. Banks have generally argued that the interpretation is contrary to the intent of Congress, which they said is more focused on others committing fraud on banks.

 

Bank of America's case was the first to go to trial, a rarity given that banks more typically choose to settle government claims instead of face a jury. But Bank of America had said that it "can't be expected to compensate every entity that claims losses that actually were caused by the economic downturn."

 

In a statement, Bharara said Bank of America "chose to defend Countrywide's conduct with all its might and money, claiming there was no case here."

 

"This office will never hesitate to go to trial to expose fraudulent corporate conduct and to hold companies accountable, particularly when it has caused such harm to the public," Bharara said.

In late afternoon trading, Bank of America shares were down 27 cents at $14.25 on the New York Stock Exchange.

 

The case is U.S. ex rel. O'Donnell v. Bank of America Corp et al, U.S. District Court, Southern District of New York, No. 12-01422.

When Bank of America Rules....

VIDEO: 'This Is Not America': SWAT Team Evicts Grandmother, Community Fights Back

By Van Jones and Marianne Manilov

Day after day, the media and government ignore an ongoing national tragedy: a tsunami of foreclosures is still sweeping millions of Americans out of their homes.

As many as three million American families this year will hear a terrifying knock on the door: a law enforcement officer will tell them to get out, because a bank won't work out a fair deal and allow them to stay.

But one remarkable grandmother this month refused to go quietly.

And her brave example -- including her willingness to stand up, along with her neighbors, to a SWAT team -- finally got elected officials to intervene.

A modern day Rosa Parks, her courage may well spark a national movement.

Grandmother and longtime Rochester resident Catherine Lennon was evicted from her home on March 28.

It was a moving scene captured on the video below.




But Ms. Lennon should never have been booted out. Her problem was simple enough to solve: her husband died in January of 2008, leaving her with no will and her home ownership in legal limbo. She acknowledges missing some payments.

But then, because her name was not on the house's official mortgage paperwork, she says her bank refused her checks and returned them to her. She says she has the ability to make her payments. But believe it or not: Fannie and Freddie wouldn't accept her money.

Fannie Mae, which now owns Lennon's home, received $90 billion in bailout money.

According to Max Rameau of Take Back the Land, "In order for banks to get their mortgage insurance money, they must evict the families.

Instead of a system or laws that try to keep families in their homes, banks have a perverse incentive to evict them. We should be rewarding banks that keep people in their homes, not the ones that kick people out."

Instead, according to Ms. Lennon, the bank called in the police.

A SWAT team came to evict her and her 11 children and grandchildren.

Neighbors stood with Ms. Lennon throughout the ordeal.

"This is not America," said one shocked neighbor.

Take Back The Land Rochester, a local group providing eviction defense, attempted to stop the eviction.

Seven people were arrested, including a 70-year-old neighbor, still in her pajamas.

Take Back the Land Rochester is a part of an impressive national network of volunteers who are standing on the frontlines and helping those facing eviction and foreclosure.

After Lennon's eviction, Rochester residents increased their calls and letters to their elected representatives and the media.

Congresswoman Louise Slaughter intervened and got Lennon on the phone with Fannie and Freddie to begin negotiations on the mortgage.

Senators Chuck Schumer and Kirsten Gillibrand of New York also called Take Back the Land Rochester to offer their support.

Lennon's story is both a light of hope and a warning. In the next week or two, Lennon may get her home back.

We hope to see a video of the celebration as Ms. Lennon and her family are allowed back into their family home.

But tonight Lennon and her family are in a homeless shelter.

And today across the United States, more than 8,000 people will lose their home to foreclosure.

They are grandmothers, husbands, sisters and aunts. They are the fabric of our community: the teachers, the janitors -- the same workers who are under attack in Wisconsin, Ohio, Indiana, and elsewhere.

The time has come in the United States where we all must be brave like the volunteers of Take Back the Land, where we all must be eviction defenders. Fannie Mae and Freddie Mac were originally established to help US citizens fulfill the dream of owning our homes.

In a time when communities are hurting, we must stand together and demand policies that will save American families from losing their homes.

We must stand together to protect and rebuild the American dream.

UPDATE: Bank of America today said that Ms. Lennon had fallen behind on her payments.

In response to the Bank of America statement, Ryan Acuff (an organizer with Take Back the Land- Rochester, the community group supporting Ms. Lennon) released the following statement:

After Catherine Lennon's husband died of brain and lung cancer in 2008, the Lennon family, understandably, experienced the same financial harship many people are facing today. As a result, Catherine did miss some mortgage payments to Countrywide/Bank of America, just as we have stated in our press releases and public statements. However, Catherine not only met with the Housing Council, the local HUD approved mortgage counselors, but attempted to engage with Bank of America. In fact, Catherine sent a payment to the bank, but the bank returned the check and refused to negotiate with her because the mortgage was in the name of her deceased husband, who did not leave a will. While Catherine was, indeed, delinquent, the fact remains that Bank of America refused her attempts to pay and efforts to negotiate modifications to her mortgage for the reasons stated above.