The US government has raised the amount it is seeking in penalties from Bank of America to $2.1 billion after a jury found the bank was liable for fraud over defective mortgages sold by its Countrywide unit.
The request in a court filing late yesterday was based on gross revenue generated by the fraud, the government said.
The US justice department had previously asked for $863.6 million. The initial request was based on gross losses it said government-sponsored mortgage finance companies Fannie Mae and Freddie Mac incurred on loans purchased from Countrywide Financial Corp in 2007 and 2008.
In a December hearing, a judge asked the bank and the Justice Department to brief him on how he might base the penalties on Countrywide's gains rather than losses resulting from the mortgage sales.
A federal jury in New York in October had found Bank of America and Rebecca Mairone, a former mid-level executive at Countrywide, each liable for fraud in the civil lawsuit.
The case focused on a mortgage lending process at Countrywide, which Bank of America acquired in July 2008, called the “High Speed Swim Lane,” or alternatively “HSSL” or “Hustle.”
The government contended that Countrywide's program emphasised and rewarded employees for the quantity rather than the quality of loans produced, and eliminated check lists designed to ensure that loans were sound. Bank of America and Mairone denied wrongdoing.
Bank of America has said it was evaluating options for an appeal. "This claim bears no relation to the limited Countrywide program that lasted several months and ended before Bank of America's acquisition of the company," Lawrence Grayson, spokesman for the bank, said today.
