Federal Prosecutors Sue Bank of America Over Mortgage ProgramSubmitted by emalvini on Wed, 10/24/2012 - 21:53
Federal Prosecutors Sue Bank of America Over Mortgage Program
LEGAL/REGULATORY OCTOBER 24, 2012, 12:35
BY BEN PROTESS
9:34 p.m. | Updated
Five years after the housing market crumbled, government officials are still trying to assign blame for the problems that fueled the mortgage boom and bust.
On Wednesday, federal prosecutors in New York took aim at Bank of America. They accused it of carrying out a scheme, started by its Countrywide Financial unit, that had defrauded government-backed mortgage agencies by churning out loans at a rapid pace without proper checks. In a civil suit, prosecutors seek to collect at least $1 billion in penalties from the bank as compensation for the behavior that they say forced taxpayers to guarantee billions in bad loans.
Financial firms have been battling chaotic — and at times redundant — litigation related to the mortgage mess. The cases have come from a patchwork of federal agencies, state officials and shareholder suits, some of which have been resolved in multibillion-dollar settlements.