Bank of America escapes $1.3B mortgage fraud penalty

Miami /
May.May 24, 2016 05:00 PM

From the New York website: Bank of America is off the hook for a $1.27 billion fraud penalty for its Countrywide Financial division’s role in selling toxic mortgages to Fannie Mae and Freddie Mac in the buildup to the 2008 financial crisis.

On Monday, a Manhattan federal appeals court overturned a 2013 jury verdict that found Countrywide, which Bank of America acquired in 2008, fraudulently dumped the shoddy mortgages on the government-sponsored entities despite having promised to sell only investment-quality loans.

But the three-judge appeals court panel found that Countrywide did not engage in fraud because the sale of the toxic mortgages occurred after the contract on the deal was signed – with Judge Richard Wesley noting that “[a] party claiming fraud must prove fraudulent intent at the time on contract execution,” according to the New York Post.

Instead, Wesley said Countrywide’s substitution of the promised high-quality mortgages for shoddy loans was more akin to breach of contract than fraud, and that prosecutors would have to prove that Countrywide executives made the switch “with contemporaneous fraudulent intent.”

The appeals court also overturned a $1 million civil penalty on former Countrywide executive Rebecca Mairone, who was told by subordinates that the loans being sold to Fannie Mae and Freddie Mac fell short of their standards. [NYP]Rey Mashayekhi


Related Articles

arrow_forward_ios
4238-4276 Northwest 7th Street in Miami, Avison Young’s Michael Fay, John Crotty, David Duckworth, Brian de la Fé, Emily Brais and Berkley Bloodworth

Mixed-use Le Jeune Road dev site heads to market for $17M

Mixed-use Le Jeune Road dev site heads to market for $17M
Vlad Doronin, Len Blavatnik, and 3425 Collins Avenue (Credit: Google Maps, Gesi Schilling, and Mark Neyman / GPO)

Developer of Aman-branded towers in Miami Beach scores $35M loan

Developer of Aman-branded towers in Miami Beach scores $35M loan
Rendering of 57 Ocean and Marcelo Kingston (Credit: DBOX)

57 Ocean in Miami Beach scores $59M construction loan

57 Ocean in Miami Beach scores $59M construction loan
JPMorgan Chase CEO Jamie Dimon (Credit: Win McNamee/Getty Images, Google Maps, iStock)

JPMorgan Chase buys own branch in West Palm

JPMorgan Chase buys own branch in West Palm
South Florida lenders and landlords battle new coronavirus reality

South Florida lenders and landlords battle new coronavirus reality

South Florida lenders and landlords battle new coronavirus reality
Joseph Menaged with his units at Faena House and One57 (Credit: Facebook, Redfin, StreetEasy)

Father of “Property Wars” star pleads guilty to bank fraud

Father of “Property Wars” star pleads guilty to bank fraud
Georgina Pineda and King David Condominium at 17555 Atlantic Boulevard (Credit: Realtor)

Property manager stole HOA money, then gambled it away: police

Property manager stole HOA money, then gambled it away: police
Moishe Mana and 25 West Flagler Street

Moishe Mana buys City National Bank building in downtown Miami

Moishe Mana buys City National Bank building in downtown Miami
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...