Judge Jed Rakoff of the U.S. district court in New York on Wednesday ordered Bank of America to pay a $1.27 billion fine for fraud perpetrated by Countrywide Financial Corp., a mortgage company the bank acquired in 2008.
In October, a jury decided that Bank of America was liable for the bad loans Countrywide sold to Fannie Mae and Freddie Mac as part of its mortgage-lending program during the housing market collapse in 2007-08.
In his ruling, Judge Rakoff said:
“It was from start to finish the vehicle for a brazen fraud by the defendants, driven by a hunger for profits and oblivious to the harms thereby visited, not just on the immediate victims but also on the financial system as a whole.”
Fannie Mae and Freddie Mac paid nearly $3 billion when they bought the bad loans. The government had sought penalties of $2.1 billion from BofA. The judge noted that not all of the loans were bad so the damages reflected that compromise.
In his ruling, Judge Rakoff also imposed a fine of $1 million on Rebecca Mairone, a former top Countrywide manager. The jury in October had found her guilty of one count of fraud.
Julie DiMauro is the executive editor of FCPA Blog and can be reached here.