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Judge orders BofA Countrywide to pay $1.3B for toxic mortgages

Settlement is just over half what feds wanted

scale and gavel

A federal judge has ordered Bank of America’s (BAC) Countrywide unit to pay $1.3 billion in penalties for junk mortgages sold to the government sponsored enterprises in the years prior to the 2008 financial crisis, Bloomberg is reporting.

The amount was a little more than half of what the government had sought.

U.S. District Judge Jed Rakoff in Manhattan  issued the civil penalty against the Charlotte, North Carolina-based bank today in the first mortgage-fraud case brought by the federal government to go to trial.

Countrywide and Rebecca Mairone, a former executive with the mortgage lender, were found liable by a jury in Manhattan federal court in October for selling thousands of bad loans to the two government-sponsored enterprises. Mairone was ordered to pay $1 million.

While Rakoff didn’t grant the government’s request for the maximum penalty of $2.1 billion, he concluded that Fannie and Freddie paid Countrywide nearly $3 billion for the HSSL loans. The judge reduced the penalty by 43 percent because experts for both sides said more than 57 percent of the loans were of “acceptable quality.”

Source: Bloomberg
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