Jury finds Bank of America guilty of loan fraud

NEW YORK, Oct. 23 (UPI) -- A Manhattan jury found Bank of America guilty of fraud by purchasing Countywide Financial, which, in 2007, rushed to sell loans to national mortgage brokers.

The Wall Street Journal reported Wednesday that the loans sold to the Federal Home Loan Mortgage Corporation, known as Freddie Mac, and the Federal National Mortgage Association, known as Fannie Mae, were sold under a program called "the Hustle," which was created in 2007 and was designed specifically to have the company move quickly into prime mortgage loans.

But prosecutors argued that Countywide sacrificed quality of loans reviews for speed, a factor many consider to be one of the principle banking errors that lead to the 2008 financial crisis -- a rush to profits that failed to consider the outcome should the market begin to crumble under the weight of poor quality loans.

"The jury's decision concerns a single Countrywide program that lasted several months and ended before BofA's acquisition," said a Bank of America spokesman.

"We will evaluate our options for appeal," the spokesman said.

Civil penalties have yet to be determined in the case. But the sum, to be determined by District Judge Jed Rakoff, is not expected to be high, the Journal reported.

Freddie Mac and Fannie Mae reportedly lost $131 million by purchasing loans churned out through the Hustle program.

Bank of America has spent about $49 billion on legal fees related to its purchase of Countrywide, which has come to symbolize the role financial firms played in creating the financial crisis, the newspaper said.

The case decided Wednesday concerned a Countrywide program that was "about speed and volume and not about quality," Assistant U.S. Attorney Jaimie Nawaday told jurors in the prosecutor's closing arguments.