The Jury’s In: Bank of America is Guilty
A federal jury determined Wednesday that Bank of America (NYSE:BAC) was liable for defrauding Fannie Mae (FNMA.OB) or Freddie Mac (FMCC.OB) by selling them thousands of dollars of defective mortgages. However, United States District Judge Jed Rakoff has not determined the civil penalty. The Justice Department has said it is seeking a penalty equal to either Fannie Mae and Freddie Mac’s losses or the defendants’ gain — whichever amount was greater — and it has estimated the “gross loss” on the toxic loans was $848.2 million while the “net loss,” or the amount due to the portion of the loans that the government said were materially defective, amounted to $131.2 million. Countrywide earned at least $165 million using a loan program that sped up mortgage loan origination.
The decision came quickly, after a four-week long trial, the jury only began deliberations Wednesday morning.
“The jury’s decision concerned a single Countrywide program that lasted several months and ended before Bank of America’s acquisition of the company,” Lawrence Grayson, a spokesman for the bank, said in an emailed statement to Bloomberg. “We will evaluate our options for appeal.”