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Bank of America seeks to void verdict in $1.27 billion 'Hustle' case
Started:August 28th, 2014 (07:53 PM) by kbit Views / Replies:106 / 0
Last Reply:August 28th, 2014 (07:53 PM) Attachments:0

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Bank of America seeks to void verdict in $1.27 billion 'Hustle' case

Old August 28th, 2014, 07:53 PM   #1 (permalink)
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Bank of America seeks to void verdict in $1.27 billion 'Hustle' case

Bank of America Corp on Thursday asked a federal judge to throw out a jury verdict finding it liable for fraud over defective mortgages sold by its Countrywide unit that resulted in a $1.27 billion penalty.

The bank urged U.S. District Judge Jed Rakoff in Manhattan to rule for it as a matter of law or order a new trial, arguing that the evidence at trial did not support the jury's October 2013 verdict.

Bank of America said prosecutors were required at trial to prove that loans originated by Countrywide Financial Corp in a process called "Hustle" that were then sold to government mortgage finance giants Fannie Mae and Freddie Mac were not as good as the lender represented.

"The trial evidence, even viewed in the light most favorable to the government, did not prove fraud under this standard," the bank's lawyers wrote.

A spokeswoman for Manhattan U.S. Attorney Preet Bharara, whose office brought the case in 2012, declined comment. Bharara's office is expected to respond Sept. 18.

The motion came a week after Bank of America agreed to a record $16.65 billion settlement with the U.S. government to settle charges that it and companies it bought misled investors into buying troubled mortgage-backed securities.

While the settlement went a long way to resolving the bank's exposure to government cases and probes stemming from the financial crisis, the deal did not include the case before Rakoff, which Bank of America said it would appeal.

The lawsuit centered on a program called the "High Speed Swim Lane" - also called HSSL or Hustle - that the government said began in 2007 at Countrywide, which Bank of America acquired in 2008.

The government said the program emphasized quantity over quality, rewarding employees for producing more loans and eliminating checkpoints designed to ensure the loans' quality.

Last year, a jury found Bank of America and a former mid-level Countrywide executive, Rebecca Mairone, liable for fraud.

In a decision last month, Rakoff ordered Bank of America to pay $1.27 billion and Mairone to pay $1 million.

The judge at that time called the Hustle program "from start to finish the vehicle for a brazen fraud" and said the evidence of the fraud was "ample."

Bank of America seeks to void verdict in $1.27 billion 'Hustle' case | Reuters

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