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Bank of America sued for alleged mortgage fraud

Bank of America local bank exterior
By Chris Isidore, CNNMoney

NEW YORK (CNNMoney) – The Justice Department is seeking $1 billion from Bank of America, alleging the bank committed fraud by selling defective mortgages from a program it says was known within the bank as “the Hustle.”

Those mortgages were purchased by government-backed mortgage finance firms Fannie Mae and Freddie Mac, resulting in over $1 billion in losses for taxpayers and countless foreclosures, according to the complaint announced Wednesday the U.S. Attorney for the Southern District of New York.

The suit alleges that “the Hustle” was a nickname for the bank’s “High-Speed Swim Lane” or HSSL program, designed to streamline the mortgage origination process. But the government alleges it was “intentionally designed to process loans at high speed and without quality checkpoints, and which generated thousands of fraudulent and otherwise defective residential mortgage loans.”

The government says the program was started by mortgage lender Countrywide Financial, but continued after it was purchased by Bank of America in 2008.

Bank of America was not immediately available for comment.

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