Bank of America disputes $2.1 billion claim in U.S. fraud suit

Wed Feb 26, 2014 9:38pm EST
 
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By Jessica Dye

NEW YORK (Reuters) - Bank of America Corp (BAC.N: Quote) said it does not owe the U.S. government the $2.1 billion it is seeking in penalties after a jury found the bank liable for fraud over defective mortgages sold by its Countrywide unit, according to a court filing made on Wednesday.

Lawyers for the bank said the government's request "contradicts every pertinent legal principle" and called it a "dramatic departure from reality," the filing stated. Bank of America said in the filing that it should only have to pay the amount it made in profit from selling the loans, which it contended was zero.

A spokesman for the U.S. attorney's office in Manhattan declined to comment. A spokesperson for Bank of America could not be reached for comment Wednesday evening.

A federal jury in New York in October found Bank of America and Rebecca Mairone, a former mid-level executive at Countrywide, each liable for fraud in the civil lawsuit.

The case focused on a mortgage lending process at Countrywide, which Bank of America acquired in July 2008, called the "High Speed Swim Lane," or alternatively "HSSL" or "Hustle."

The government contended that Countrywide's program emphasized and rewarded employees for the quantity rather than the quality of loans produced and eliminated checklists designed to ensure that loans were sound.

Bank of America and Mairone denied wrongdoing. Bank of America has said it was evaluating options for an appeal.

Any penalty would be assessed by U.S. District Judge Jed Rakoff.   Continued...

 
An ATM machine at a Bank of America office is pictured in Burbank, California August 19, 2011. REUTERS/Fred Prouser