UNITED STATES SUES BANK OF AMERICA FOR MORTGAGE ABUSES
Bank of America has been sued by the federal government under the “False Claims Act” for allegedly misrepresenting the quality of mortgage loans it sold to Fannie Mae and Freddy Mac prior to the financial meltdown in 2008.
Bank of America has been sued by the federal government under the “False Claims Act” for allegedly misrepresenting the quality of mortgage loans it sold to Fannie Mae and Freddy Mac prior to the financial meltdown in 2008. Bank of America acquired Countrywide Home Loans, the nation’s largest mortgage lender at one time, and the poster child for predatory and irresponsible lending. The government states that the taxpayers have had to pay the tab for bailing out Fannie Mae and Freddy Mac when loans that they purchased from Countrywide and Bank of America defaulted. Under the False Claims Act, the government can obtain triple damages if the lawsuit is successful. The government paid $142 billion to save Fannie and Freddy.
Earlier this year, Bank of America settled a similar lawsuit filed by the Federal Housing Administration (FHA). The bank agreed to pay a billion-dollar settlement without admitting any wrongdoing in that case.
These lawsuits illustrate an industry that was out of control prior to the economic collapse in 2008. In order to earn transaction fees in amounts that working Americans cannot even comprehend, Wall Street banks were willing to put the entire U.S. and world economies at risk. The result was devastating to ordinary Americans who lost their jobs by the millions, many having to file for bankruptcy. Sadly, little has changed. Efforts to regulate these institutions have met with stiff resistance in the United States. In Europe, however, significant regulations are now in place and should help to protect the continent from a duplication of these tragic events.