A close up view of the Bank of America logo on top of the Canary Wharf building in 2011. (Photo : Wikimedia Commons)
The U.S. Department of Justice is reportedly looking for $1 billion from Bank of America claiming that the bank was selling defective mortgages.
The mortgages were bought by government-funded mortgage finance firms Fannie Mae and Freddie Mac which led to losses of over $1 billion for taxpayers and resulted in many foreclosures according to CNN.
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The complaint was officially announced today by the U.S. Attorney for the Southern District of New York.
"The fraudulent conduct alleged in today's complaint was spectacularly brazen in scope," Preet Bharara, the United States attorney in Manhattan, said in a press statement.
The program, which was known as "the hustle" was nicknamed after the bank's "High-Speed Swim Lane" or HSSL program. The company overtook "the hustle" when they purchased Countrywide Financial in 2008 according to the New York Times.
"The goals of the Hustle were high speed and high volume, where loans 'move forward, never backward' in the origination process," Bharara said in his statement. "To accomplish these goals, the Hustle removed necessary quality control 'toll gates' that could slow down the origination process."
The lawsuit filed Wednesday could impose drastic fines on Bank of America, which is the second-biggest bank in the U.S. Some experts believe the overall penalty could reach as high as $3 billion.
Bank of America has yet to comment on the accusations.
"For the sixth time in less than 18 months, this office has been compelled to sue a major U.S. bank for reckless mortgage practices in the lead-up to the financial crisis," said Bharara in the press statement. "The fraudulent conduct alleged in today's complaint was spectacularly brazen in scope."
Earlier this month, New York Attorney general Eric Schneiderman sued JPMorgan Chase &Co. over defective mortgage loans according to Bloomberg Businessweek. The bank has so far denied the allegations.