Bank of America faces at trial ex-executive behind whistleblower case

Thu Sep 26, 2013 10:16pm EDT
 
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By Nate Raymond

NEW YORK (Reuters) - A former executive at Bank of America Corp's (BAC.N: Quote) Countrywide unit testified Thursday that the mortgage company's problematic lending practices predated the "Hustle" process for which the bank went on trial this week.

Edward O'Donnell, a former executive vice president at a Countrywide Financial Corp subsidiary, filed a whistleblower lawsuit last year against Bank of America, which bought Countrywide during the financial crisis.

O'Donnell's lawsuit is the basis of the U.S. Justice Department's case alleging that Countrywide defrauded mortgage underwriters Fannie Mae and Freddie Mac by selling them mortgages that later defaulted.

O'Donnell, who stands to earn an award if the government wins at trial, was testifying for the government on Thursday, the third day of the trial.

He said he worked at a Countrywide division that handled subprime mortgage loans. When Countrywide tried to move away from that business, a unit of the company making less-risky prime loans was folded into his, he said.

There were instances where loans that unit produced "did not meet our standards and had problems," he said.

"I saw these instances as problems," he said. "I wanted greater quality and better control."

Countrywide later made some changes at his urging, he said.   Continued...

 
A man walks next to a Bank of America's branch in New York October 24, 2012. REUTERS/Eduardo Munoz