U.S. officials said that Bank of America Corp.’s Countrywide unit should pay the maximum of $2.1 billion in penalties for selling defective mortgage loans to Fannie Mae and Freddie Mac in the run-up to the 2008 financial crisis, Bloomberg News reported yesterday. U.S. District Judge Jed Rakoff is considering how much to penalize the bank following months of arguments over the size of the civil fine that Charlotte, North Carolina-based Bank of America should pay in the first mortgage-fraud case brought by the U.S. to go trial. The bank has claimed it should have to pay $1.1 million at most. “To punish defendants for their culpability and bad faith, and to deter financial institutions and their executives who would engage in similar fraudulent mortgage schemes, the court should impose the maximum penalty,” Manhattan U.S. Attorney Preet Bharara said in a court filing yesterday. Countrywide is still a defendant in a securities fraud case brought by the Federal Housing Finance Agency, the conservator of Fannie Mae and Freddie Mac, over billions of dollars in residential mortgage-based securities. Bank of America and Countrywide also face $10 billion in claims by American International Group Inc. over mortgage securities.
