Government Opposes BofA Bid to Throw Out ‘Hustle’ Verdict

(The Charlotte Observer/MCT) —

The U.S. government is opposing Bank of America’s request that a federal judge throw out a jury verdict that found it liable for fraud over mortgages sold to mortgage giants Fannie Mae and Freddie Mac.

The government’s opposition comes after the Charlotte, N.C., bank last month requested a judgment in its favor or a new trial in the so-called “Hustle” case. Last year, a jury found the bank liable for Countrywide Financial Corp.’s sale of home loans made under a Countrywide program nicknamed “Hustle.”

The Hustle lawsuit is among litigation still hanging over the bank after last month’s landmark $16.65 billion settlement with the U.S. government and various states over soured mortgage bonds. That accord was the biggest civil settlement between a single company and the government, and it resolved a variety of probes into the bank.

In court filings Thursday, the government said it presented “more than sufficient” evidence at trial to show that Countrywide lied to Fannie and Freddie about the quality of the loans, which later defaulted and led to the mortgage giants incurring millions of dollars in losses.

The government claims the Hustle program generated loans in a process that emphasized speed and volume at the expense of quality. Countrywide marketed those loans as investment grade despite their poor quality, the government has argued.

The jury last year also found former Countrywide executive Rebecca Mairone liable for her role in the Hustle program.

In July, New York Judge Jed Rakoff ordered Bank of America to pay $1.27 billion in civil penalties and Mairone to pay a penalty of $1 million.

Bank of America, which bought Countrywide in 2008, has argued in court filings that Countrywide did not misrepresent the quality of the loans, whose quality was “well within” standards Fannie and Freddie expected.

Bank of America spokesman Lawrence Grayson declined to comment Friday.

In an emailed statement Friday, Mairone’s lawyer, Marc Mukasey, said: “There was no proof that Rebecca knew even a single loan was not of investment quality nor that she sold any loans knowing as much.”

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