Bank of America Fined for “Hustle” Fraud

Bank of America was recently fined $1 billion for fraudulent mortgages sold to Fannie Mae and Freddie Mac plus civil mortgage fraud Wednesday. The allegations include the surpassing of all loan “slowdowns” in their “Hustle” system, including quality control nd mortgage quality checking during the national financial crisis of 2007 to 2009.

The federally backed mortgage buyers Fannie Mae and Freddie Mac had at least $ 1 billion in losses for “defaulted” mortgages sold by Countrywide Financial and Country Wide Home Loans, which were picked up by Bank of America after buying Countrywide’s operations in 2008.

U.S. Attorneys made a 46-page complaint against Bank of America stating allegations that they removed underwriters, quality controls and urged many unqualified personnel to ensure that they gained more profit after selling the labeled “good loans” to nationalized mortgage buyers.

“Hustle” was a system that compensated Countrywide employees with incentives based on the number of mortgages they sold, not based on the quality of mortgages that ultimately removed the calculation of loan integrity. Unqualified employees were given critical underwriting tasks and even answered borrower questions regarding the deals.

Bank of America’s shares dropped to $9.31 after the news of the lawsuit was publicly released, down five cents. Shares began to rise up again in the after-hours

Source: USA Today

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The Financial Ombudsman Service (FOS) recently reached the 500,000th mark of PPI claims but are still wary of the millions of claims that await processing. Banks complained that claims management companies (CMC) and the Financial Services Authority are to blame for the high volume of fraudulent claims that have swamped the FOS. However, FOS Chief Ombudsman Natalie Ceeney states that it is not the fault of CMCs, the FSA and the customers, but the banks themselves.

Ceeney states that banks should own up responsibility for their actions and avoid hassling and inconveniencing their customers who are making PPI claims for their repayments. It is the exposure of bad bank practices that led to the 2.2 million claims processed from January to June of 2012 and banks are ruled out by the High Court to compensate all who are ineligible for the insurance policies.

The total bill for payment protection compensation by banks have reached £13 billion with Barclays having £2 billion, Lloyds with £4.3 billion and other banks having at least £1.3-1.5 million in their total bill. Recently, Lloyds has a total of over 400,000 claims from complaining customers for mis sold PPI.

“Bogus” claims were a result of how far customers are going against their banks. Ceeney sees the turning of people to CMCs as a qualm of “broken trust” banks have with customers. With virtually everyone in the United Kingdom mis sold PPI, she states that it is still “a ways off” before the crisis finally gets done with.

For more information about reclaiming mis-sold PPI, visit the PPI Claims Company website – www.missoldppiclaimsco.co.uk.