Bank of America goes to trial over fraud charges
Bank of America Corp. headed to trial this week. This was after it was alleged of approving deficient home loans in a process referred to as "Hustle". The said process had defrauded Fannie Mae and Freddie Mac, the US government enterprises that underwrite mortgages.
The jury selection was set to start in a federal court in New York. This would be the first financial crisis case to go to trial against a major bank over defective mortgages. The trial had barred a last minute settlement.
The trial had also been a reminder of the billions of dollars in legal liabilities that Bank of America incurred. This was after the financial lender acquired Countrywide Financial Corp. last 2008. Countrywide became the poster child of the mortgage meltdown.
In 2012, the US Justice Department filed the civil lawsuit against Bank of America. The justice department blamed the bank for more than USD1 billion losses in Fannie Mae and Freddie Mac. Bank of America bought mortgages from Fannie Mae and Freddie Mac which later defaulted.