U.S. District Judge Jed Rakoff has ordered the Bank of America to pay $1.27 billion in penalties in connection with a wide-ranging mortgage fraud perpetrated by its Countrywide financial unit, and slapped a $1 million personal judgment on a former Countrywide executive, the New York Law Journal reported today. Judge Rakoff's decision, released yesterday, followed a trial last fall in which jurors found that Countrywide and Rebecca Mairone, the only individual charged in the case, defrauded the government-sponsored Freddie Mac and Fannie Mae programs by peddling at break-neck speed what they knew were substandard loans during the recession of 2007 and 2008. The case was initially rooted in a Securities and Exchange Commission action against three top Countrywide executives who were accused of falsely assuring investors that the company was a prime mortgage lender when in fact it was deeply involved in high risk loans. That case was settled and no criminal charges were lodged.
http://www.newyorklawjournal.com/home/id=1202665302104?kw=BofA%20Ordere…
In related news, Bank of America and federal prosecutors have accelerated their negotiations to resolve an investigation into the bank’s sale of troubled mortgage securities before the financial crisis, the New York Times. The two sides, however, remain far apart on crucial issues and a settlement remained elusive yesterday, even after the bank significantly raised its offer. The bank’s lawyers and Justice Department prosecutors met in Washington, D.C., yesterday to discuss the size of a potential cash penalty, a major sticking point in the settlement talks. Heading into the meeting, the Justice Department was demanding roughly $17 billion to settle the case, more than $10 billion in the form of a cash penalty and the rest in so-called soft dollar payments to help struggling homeowners. The bank was offering a total of $13 billion, including $4 billion in cash. The bank narrowed the gap yesterday, raising its cash offer to about $7 billion and its total proposal to roughly $14 billion.
http://dealbook.nytimes.com/2014/07/30/bank-of-america-ordered-to-pay-n…