Breaking new ground in financial crisis litigation, U.S. District Judge Jed Rakoff in Manhattan on Wednesday ordered Bank of America Corporation to pay $1.27 billion in a civil fraud case brought by the U.S. Department of Justice. The ruling follows a October 2013 jury verdict that BofA’s Countrywide Financial unit defrauded Fannie Mae and Freddie Mac into buying shoddy mortgages originated through an accelerated process known internally as High Speed Swim Lane (HSSL), or “Hustle.”
In a 19-page ruling, Rakoff concluded that the $1.27 billion fine is appropriate under the penalty provisions of the Financial Institutions Reform, Recovery and Enforcement Act of 1989 (FIRREA), the civil statute the Justice Department charged Countrywide with violating. Rakoff also fined former top Countrywide employee Rebecca Mairone $1 million for her role in the HSSL scheme.
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