Bank of America Corp. asked a federal judge to dismiss a $1 billion fraud lawsuit filed by the U.S. alleging that it sold defective residential mortgage loans to Fannie Mae and Freddie Mac that defaulted, Bloomberg News reported yesterday. The Justice Department filed the complaint last year claiming the bank and its Countrywide Financial unit generated thousands of defective loans and sold them to the two home-mortgage finance companies now under government control. To boost revenue in the tightening credit market in mid-2007, Countrywide sold the loans to boost revenue, according to the complaint. Charlotte, N.C.-based Bank of America argued that the suit was based on a single alleged factual scenario and fails to state a claim. U.S. District Judge Jed Rakoff said after hearing arguments yesterday that he intends to issue a ruling in about two weeks.
