Countrywide Financial Corp., now part of Bank of America Corp. (NYSE: BAC) is the gift that just keeps on giving. Today, for example, the former high-flying mortgage lender delivered a lawsuit to BofA from the U.S. Attorney for the Southern District of New York seeking at least $1 billion in damages for fraudulent lending practices.
The government alleges that Countrywide and BofA simply lied about the quality of loans that were sold to Fannie Mae and Freddie Mac as qualified for federal insurance. BofA acquired Countrywide in 2008 and the loans were sold to the federally-backed agencies between 2007 and 2009.
The suit is being brought under the Federal False Claims Act and could cost BofA triple damages if the government can prove its case. Two weeks ago the same U.S. attorney filed suit against Wells Fargo & Co. (NYSE: WFC) claiming that the bank had issued mortgages without regard to the borrowers’ ability to repay them and then fobbed the loans off on the Federal Housing Administration.
BofA in February agreed to settle a similar case for $1 billion in the eastern district of New York, and just last month the bank paid $2.43 billion to settle claims related to its acquisition of Merrill Lynch & Co. BofA is also among 18 banks being sued by the Federal Housing Finance Agency, the government regulator of Fannie and Freddie, for violating federal securities laws related to the sale of residential mortgage-backed securities.
BofA has so far had to bear about $42 billion in litigations expenses, payouts, and reserves related to the financial crisis of 2008-2009, according to The Wall Street Journal.
Today’s lawsuit probably isn’t enough to kill BofA, but it’s more than a bee sting and makes one wonder when the pain will stop.
Shares of the company’s stock are up about 0.8% at $9.44 in a 52-week range of $4.92 to $10.10.
Are You Still Paying With a Debit Card?
The average American spends $17,274 on debit cards a year, and it’s a HUGE mistake. First, debit cards don’t have the same fraud protections as credit cards. Once your money is gone, it’s gone. But more importantly you can actually get something back from this spending every time you swipe.
Issuers are handing out wild bonuses right now. With some you can earn up to 5% back on every purchase. That’s like getting a 5% discount on everything you buy!
Our top pick is kind of hard to imagine. Not only does it pay up to 5% back, it also includes a $200 cash back reward in the first six months, a 0% intro APR, and…. $0 annual fee. It’s quite literally free money for any one that uses a card regularly. Click here to learn more!
Flywheel Publishing has partnered with CardRatings to provide coverage of credit card products. Flywheel Publishing and CardRatings may receive a commission from card issuers.
Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.
Latest from 24/7
Our expert who first called NVIDIA in 2009 is predicting 2025 will see a historic AI breakthrough.
You can follow him investing $500,000 of his own money on our top AI stocks for free.