Justice Dept. Sues Bank of America Over Mortgage Securities
By JESSICA SILVER-GREENBERG, NYT
The Justice Department sued Bank of America on Tuesday, accusing the bank of defrauding investors by vastly understating the risks of the mortgages backing about $850 million in securities.
The lawsuit adds to the hefty legal burden of the bank, which has been badly battered by mortgage-related losses and litigation since the financial crisis. The great bulk of those troubles stem from the bank’s 2008 acquisition of the subprime lender Countrywide Financial.
Yet the latest litigation centers on Bank of America’s own homegrown mortgage operations. And the loans at issue were represented as prime jumbo mortgages — at the time, 2007, loans of more than $417,000 for a single-unit dwelling — rather than subprime mortgages, which were at the heart of the mortgage crisis.
Those new elements were woven into a familiar narrative as the Justice Department’s lawsuit portrayed the bank’s mortgage operations as emblematic of Wall Street’s reckless practices in the heady days before the financial crisis.
(More here.)
The Justice Department sued Bank of America on Tuesday, accusing the bank of defrauding investors by vastly understating the risks of the mortgages backing about $850 million in securities.
The lawsuit adds to the hefty legal burden of the bank, which has been badly battered by mortgage-related losses and litigation since the financial crisis. The great bulk of those troubles stem from the bank’s 2008 acquisition of the subprime lender Countrywide Financial.
Yet the latest litigation centers on Bank of America’s own homegrown mortgage operations. And the loans at issue were represented as prime jumbo mortgages — at the time, 2007, loans of more than $417,000 for a single-unit dwelling — rather than subprime mortgages, which were at the heart of the mortgage crisis.
Those new elements were woven into a familiar narrative as the Justice Department’s lawsuit portrayed the bank’s mortgage operations as emblematic of Wall Street’s reckless practices in the heady days before the financial crisis.
(More here.)
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