NEW YORK — The latest federal lawsuit over alleged mortgage fraud paints an unflattering picture of a doomed lender: Executives at Countrywide Financial urged workers to churn out loans, accepted fudged applications and tried to hide ballooning defaults.
The suit, filed Wednesday by the top federal prosecutor in Manhattan, also underscored how Bank of America’s purchase of Countrywide in July 2008, just before the financial crisis, backfired severely.
The prosecutor, Preet Bharara, said he was seeking more than $1 billion, but the suit could ultimately recover much more in damages.
“This lawsuit should send another clear message that reckless lending practices will not be tolerated,” Mr. Bharara said in a statement. He described Countrywide’s practices as “spectacularly brazen in scope.”
He called the accusation that the bank has failed to buy back loans “simply false.”
It operated under the motto, “Loans Move Forward, Never Backward.”
The program eliminated checks meant to ensure that mortgages were being granted to borrowers who could afford them, according to the lawsuit.
For example, loan processors no longer had to complete worksheets that helped them assess whether income levels that borrowers entered on their loan applications were reasonable.View Entire Story
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