Bank of America must face mortgage fraud trial, judge rules
BANK OF AMERICA Corp. will have to face a trial in September over mortgages that its Countrywide unit sold to Fannie Mae and Freddie Mac after U.S. District Court Judge Jed Rakoff rejected a request to dismiss the case.
BLOOMBERG FILE PHOTO/JIN LEE
By Christie Smythe Bloomberg News
NEW YORK - Bank of America Corp. must face a trial next month in a lawsuit alleging the bank’s Countrywide unit defrauded Fannie Mae and Freddie Mac by selling them billions of dollars in bad mortgages, a federal judge ruled.
U.S. District Judge Jed Rakoff in Manhattan issued a ruling Tuesday rejecting the bank’s request to dismiss the case, putting it on track for a trial scheduled to begin Sept. 23.
“The court concludes that there remain genuine factual disputes that, on at least one or more of the government’s theories, precludes the granting of summary judgment to any defendant,” Rakoff said in a one-page order, saying he would file a full opinion at a later date.
The United States sued Bank of America in October, intervening in a whistle-blower action originally filed by a former Countrywide executive, Edward O’Donnell. The U.S. claimed Bank of America and Countrywide, which it acquired in 2008, sold thousands of defective loans from 2007 to 2009 to the home-mortgage finance companies.
The government alleged Countrywide engaged in a “host of irresponsible origination practices that prioritize funding speed and discourage scrutiny and quality into a singularly risky loan manufacturing process that pumped out large quantities of poor quality loans,” according to a memorandum filed in July.
“This program ended before our purchase of Countrywide, as the government acknowledges,” said Lawrence Grayson, a spokesman for Charlotte, N.C.-based Bank of America. “We believe there was no fraud.”