NEW YORK, Oct 25 (Reuters) – Bank of America Corp employees could face civil fraud charges as part of a federal lawsuit accusing the bank of causing taxpayers more than $1 billion in losses by selling toxic mortgage loans to Fannie Mae and Freddie Mac, a prosecutor said on Thursday.
The comments were made at a hearing in Manhattan federal court to set a timetable for the U.S. Department of Justice’s first civil fraud lawsuit over mortgage loans sold to the two big mortgage financiers, which the government had announced on Wednesday. Fannie Mae and Freddie Mac were bailed out and put in government conservatorship in 2008.
“Potentially, the government may amend its complaint to include individuals, present or former employees of Bank of America,” Assistant U.S. Attorney Pierre Armand told U.S. District Judge Jed Rakoff.
The judge asked the prosecutors to amend their complaint by year end. The case involves mortgage lender Countrywide Financial Corp, which Bank of America bought in July 2008.