Washington Accuses Bank of America of Fraud

Posted October 24th, 2012 at 1:35 pm (UTC-5)
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The U.S. government is suing the Bank of America, seeking more than one billion dollars for alleged fraud in the sale of home mortgages.

The Bank of America is a private company and the second-largest bank in the United States.

The bank bought Countrywide mortgage company, which is accused of selling thousands of fraudulent loans to mortgage-finance companies Fannie Mae and Freddie Mac.

Countrywide is alleged to have recklessly rushed to make many mortgage loans without properly checking to see if borrowers had a realistic chance of repaying the money and then giving Freddie and Fannie false assurances about the quality of the mortgages.

Federal prosecutor Preet Bharara says the Bank of America made “disastrously bad loans and stuck the taxpayers with the bill.”

During the financial crisis, Washington bailed out Fannie and Freddie with emergency loans.