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Bank of America lawsuit: US sues over bad loans

The US is seeking $1 billion in the Bank of America lawsuit over loans to Fannie Mae and Freddie Mac.

Bank of America lawsuit 10-24 2012Enlarge
The US government sued Bank of America on Oct. 24, 2012 for $1 billion over allegedly bad loans sold to Fannie Mae and Freddie Mac. (Spencer Platt/AFP/Getty Images)

The US government sued Bank of America on Wednesday for $1 billion over allegedly bad loans issued to Fannie Mae and Freddie Mac.

The litigation actually targets Countrywide Financial, which was later bought by Bank of America.

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US Attorney Preet Bharara told the Associated Press that the mortgage company's procedures were designed to process loans at high speed, resulting in thousands of fraudulent loans.

He claims this is the first civil fraud suit brought by the US Justice Department over loans later sold to government-controlled housing giants Fannie and Freddie.

“The fraudulent conduct alleged in today’s complaint was spectacularly brazen in scope,” Bharara said in a statement.

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The case is the latest legal headache for Bank of America over its acquisition spree during the financial crisis, The New York Times reported.

In September, it paid $2.4 billion to settle a securities class-action lawsuit alleging the bank misled investors about its takeover of Merrill Lynch.

Bank of America also announced plans last month to cut 16,000 jobs as part of a restructuring agreement.

http://www.globalpost.com/dispatch/news/business/121024/bank-america-lawsuit-us-sues-over-bad-loans