Federal judge allows FIRREA law interpretation against Bank of America

By IVCPOST Staff Reporter

Aug 24, 2013 07:09 AM EDT

US District Judge Jed Rakoff allowed the fraud case against Bank of America to proceed by endorsing the broad interpretation of the Financial Institutional Reform, Recovery and Enforcement Act (FIRREA). The FIRREA basically allows the government regulators to file civil lawsuits against those who defraud federally insured financial institutions.

The decision of the federal judge allowed the Justice Department to proceed with the case it brought against the Countrywide Financial mortgage unit of Bank of America. The US regulator questioned the 2007 "High Speed Swim Lane" or "HSSL" or "Hustle" program of the Bank of America unit. The Justice Department said the program removed quality checkpoints by speeding up the processing of some home loans. This resulted to defective and fraudulent mortgages reaching to the thousands sold to Freddie Mac and Fannie Mae. The trial for the case is scheduled on September 23.

The FIRREA has strong powers of subpoena and requires low burden of proof. It also has a ten-year statute of limitations which is two times longer than the limit imposed on other cases of fraud.

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