U.S. Attorney alleges Bank of America defrauded Fannie and Freddie

The U.S. Attorney for the Southern District of New York is suing Bank of America for $1 billion — alleging that the bank defrauded Fannie Mae and Freddie Mac.

The suit alleges that Countrywide Financial, which Bank of America later acquired, administered a loan-origination process which generated thousands of either fraudulent or defective loans that were then sold to Fannie and Freddie.

This suit comes on the heels of another one filed by the U.S. Attorney for the Southern District, Preet Bharara, against Wells Fargo. The allegations over that suit center on the bank’s failure to properly underwrite at least 100,000 loans it had stamped for approval for Federal Housing Administration insurance over 10 years.

New York State Attorney General Eric Schneiderman has also been active on the bank lawsuit front. Earlier this month, he launched a probe against Credit Suisse, investigating its repackaging and sale of mortgage-backed securities. The federal task force created to address mortgage-backed security fraud, of which Schneiderman is co-chair, sued Bear Stearns, now a unit of J.P. Morgan Chase, in early October over alleged misconduct in the packaging and selling of mortgage securities in the boom years. [Bloomberg] — Zachary Kussin