DOJ again rebuked in effort to enforce massive BofA ‘Hustle’ mortgage fine

Billion-dollar settlement for Countrywide home loans denied

Needless to say, the federal government probably isn’t too happy with the United States Court of Appeals for the Second Circuit right now.

That’s because for the second time in three months, the Second Circuit rebuked an effort by the government to extract one of the largest fines to come out of the housing crisis.

In May, the Second Circuit overturned a $1.27 billion penalty against Bank of America in a fraud case over defective mortgages sold by Countrywide in the run-up to the housing crisis.

And Monday, the Second Circuit denied the government’s request to reconsider its decision, according to a report from the Wall Street Journal.

Read on.

2nd Circ. Won’t Rethink Tossing BofA $1.3B Mortgage Fine

Law360, New York (August 22, 2016, 7:20 PM ET) — The Second Circuit on Monday refused to rehear its decision tossing a roughly $1.3 billion penalty against Bank of America for a financial crisis-era mortgage program, rejecting a request by the U.S. Attorney’s Office in Manhattan, which said the ruling overlooked important evidence.

The appeals court rejected the government’s request for a rehearing pushing back against a three-judge panel’s May finding that it hadn’t presented enough evidence that Bank of America subsidiary Countrywide Financial and a former executive had defrauded Fannie Mae and Freddie Mac. (Credit:…

Source: Law360

U.S. Appeals Ruling That Throws Out Crisis-Era Bank of America Case

Justice Department aims to salvage high-profile mortgage-fraud case

WASHINGTON—The Justice Department asked a federal appeals court to reconsider its ruling throwing out a civil mortgage-fraud case against Bank of America Corp., in an uphill effort to rescue one of its highest-profile cases tied to the financial crisis.

The U.S. attorney’s office in Manhattan said in a Thursday filing the court had “overlooked a wealth of evidence” in reaching a May decision that found the government hadn’t proven fraud by Bank of America’s Countrywide unit over a program dubbed “Hustle.”

The court said at the time the case amounted only to breaches of a contract, a stunning setback for the government’s efforts to levy tough fines on corporations and executives. The court also threw out a related penalty against a Countrywide executive, one of the few individuals fined for alleged misdeeds during the crisis.

Read on.

Mortgage bond investors finally get paid $8.5 billion Countrywide settlement

Last month, mortgage bond investors moved one step closer to ending their five-year wait for their money from an $8.5 billion settlement involving Bank of America, mortgages originated by its Countrywide unit, and the Bank of New York Mellon, which acted as the trustee for the mortgage bond investors.

The parties originally agreed to the $8.5 billion settlement five years ago, but in the years since then, the sides battled in court over whether Bank of New York Mellon had the authority to settle.

Read on.

Chicken Little was right – “the sky IS falling”!

Remember Chicken Little and her warning, the sky is falling? I sometimes feel like a Chicken Little, with my repeated warnings that the sky is indeed falling and here’s another example.

Just last week I posted about my fellow Bank Whistlebowers United colleague Michael Winston’s interview with Gretchen Morgenson on the New York Times Facebook venue.

I’m still chilled by Michael’s description of Countrywide’s co-founder, former chairman of the board/CEO Angelo Mozilo’s funding strategy which Michael inadvertently stumbled upon after they had hired him to take their company to new heights. “Fund ’em” was the policy, regardless of their income (did they have any?), even if they had no assets. “Fund ’em” if they can fog a mirror.

Countrywide Financial Corp. wanted to be the “Goldman Sachs of the Pacific.” Instead their shoddy practices led to our 2008 financial meltdown and instead they became the face of risky lending practices, with Mozilo becoming the poster child for Wall Street greed.

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Regards,

Richard

Richard M. Bowen III
richard@richardmbowen.com
www.richardmbowen.com/
214- 604-5492

Breaking news: Countrywide’s Mozilo reportedly off the hook for all those subprime mortgages

Oh, wow! Crime does pay! A big slap in the face to Countrywide whistleblower, Michael Winston. Unbelievable!!!

One of most notorious people at the center of the housing crisis is reportedly off the hook for any supposed malfeasance, as Bloomberg is reporting that the Department of Justice is abandoning its attempt to sue Angelo Mozilo, the founder ofCountrywide, for his company’s lending practices in the run-up to the housing crisis.

Countrywide originated more mortgages in this country from 2004 to 2007 than any other lender. During that time, Countrywide closed so many subprime mortgages it remained a top-5 producer for that home loan product. The same goes for other loans, such as Alt-A.

The DOJ first began seeking a civil suit against Mozilo two years ago, after the statute of limitations expired for any criminal charges that could have been filed against Countrywide’s founder.

Mozilo long held that Countrywide “didn’t do anything wrong” when it came to the lender’s underwriting and origination practices.

In 2014, Mozilo told Bloomberg that he felt his company was not to blame for the subprime mortgage crisis.

“You’ll have to ask those people, ‘What do you have against Mozilo, what did he do?’” Mozilo said in 2014.

“Countrywide didn’t change. I didn’t change. The world changed,” he continued. “No, no, no, we didn’t do anything wrong,” he said, adding that a real estate collapse was the root of the crisis. “Countrywide or Mozilo didn’t cause any of that.”

And now, it appears that the DOJ is unable or unwilling to proceed with its case against Mozilo.

From Bloomberg:

U.S. prosecutors have abandoned their case against Angelo Mozilo, a pioneer of the risky subprime mortgages that fueled the financial crisis, after a two-year quest to bring a civil suit against him.

The Justice Department has decided not to sue Mozilo, the co-founder of Countrywide Financial Corp., according to people familiar with the matter. That effectively ends nearly a decade of U.S. scrutiny of a man who became a face of risky lending practices and later an emblem of the government’s mixed success in holding individuals accountable.

Read on.

Michael Winston, “Wall Street’s Greatest Enemy,” tells all

Whistleblowers come in all shapes and sizes and my friend and fellow Bank Whistleblowers United colleague is certainly not one that fits most descriptions of a whistleblower.

Former Countrywide Financial executive Michael G. Winston, PhD, was at the pinnacle of establishment success. He’d held C-suite positions at Motorola, Lockheed, and Merrill Lynch before being enticed by Countrywide’s potential.

The company was one of the fastest growing in the country, with a 15,000% growth rate and one of the fastest growing stocks on Wall Street. It’s founder, Andrew Mozilo had been named CEO of the year just the year prior. They wanted Michael to help them build the “Goldman Sachs on the Pacific.”

Michael was interviewed this last week by Gretchen Morgenson of the New York Times on their new whistleblower series on the Times’ Facebook channel, which I’d had the opportunity to help initiate just the month before. In his interview, Michael talked about the signs he saw at Countrywide that led him to the choice he made.

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Bank of America, Countrywide Hit With Appraisal Suits By Home Buyers

Law360, Los Angeles (June 13, 2016, 10:19 PM ET) — A proposed nationwide class of home buyers have accused Bank of America Corp., Countrywide Financial Corp. and appraisal firm LandSafe Inc. of conducting phony appraisals in an attempt to secure more loans, filing a lawsuit in California federal court on Thursday stemming from previously settled whistleblower claims.

Home buyers in California and Florida allege Countrywide, now owned by Bank of America, used its wholly-owned appraisal firm LandSafe to rip off loan applicants in violation of the Racketeer Influenced and Corrupt Organizations Act. The complaint says the alleged…

Source: Law360

No Privilege for BoA-Countrywide Merger Docs

(CN) — An insurer can compel Bank of America to release 400 pages of documents from its merger with Countrywide Financial that may shed light on whether it considered its liability for alleged pre-merger fraud, New York’s high court ruled.
Ambac Assurance Corporation sued Countrywide Home Loans, a subsidiary of Countrywide Financial Corp., when mortgage-backed loans Countrywide issued were exposed as worthless in the 2008 financial crisis.
Ambec claimed that Countrywide fraudulently misrepresented the quality of the loans, and deceptively induced it to guarantee them.
It named Bank of America as a defendant when it merged with Countrywide in 2008, seeking to hold it liable for the alleged fraud as Countrywide’s successor-in-interest.
As a result of the merger, Countrywide sold almost all of its assets to Bank of America, and became a wholly-owned subsidiary called Red Oak Merger Corporation.
In its discovery responses, Bank of America withheld approximately 400 communications that took place between Bank of American and Countrywide in the months before the merger’s close, claiming they are protected by attorney-client privilege.

Read on.

Here is the court document. Click here.

Court Says Bank of America Must Disclose Communications

New York’s highest court ruled Thursday that Bank of America must disclose to an insurer communications it had with Countrywide Financial six months before the bank bought the mortgage lending company in 2008. The insurer, Ambac Assurance Corp., claims in a lawsuit that Countrywide illegally misrepresented its mortgage-backed securities.

The Court of Appeals ruled attorney-client privilege doesn’t shield hundreds of communications between the two institutions and their lawyers from Ambac as it collects evidence for its fraud lawsuit. The court reinstated the order of a judge in Manhattan, where the fraud case is pending.

Ambac guaranteed payments on securities issued by Countrywide subsidiaries between 2004 and 2006.

“Ambac argues that the very communications Bank of America withheld from disclosure would have revealed that the merging entities structured their transaction to conceal Countrywide’s fraudulent dealings and leave potential victims without recourse,” Judge Eugene Pigott Jr. wrote. “Defendants … respond that there is no evidence of actual abuse in this case.”

Read on.