US sues BofA for $1bn over bad mortgages

The US sued Bank of America yesterday for more than $1bn for allegedly having sold dodgy mortgages to state-controlled mortgage financers Fannie Mae and Freddie Mac. The government charged that Countrywide — the mortgage giant now owned by Bank of America — labeled defective mortgages as good-quality and sold them to the two companies, causing “over $1bn dollars in losses and countless foreclosures.” The suit says that between 2007 and 2009 Countrywide ran a mortgage origination programme called “Hustle” which aimed to quickly process thousands of new mortgages without quality controls and then sell them to Fannie and Freddie. “The fraudulent conduct alleged in today’s complaint was spectacularly brazen in scope,” Preet Bahara, the US attorney in New York City, said in a statement.