NEW YORK (AP) - Federal prosecutors want a judge to order Bank of
America to pay $2.1 billion in penalties for knowingly selling bad home
loans, more than double the amount the government had sought in the
In documents filed Wednesday, the government said it wants
Bank of America to make a payment based on its total revenue from the
fraud instead of the profit it made.
The U.S. had wanted Bank of
America to pay about $864 million over losses it incurred after it
bought thousands of home loans made by Countrywide Financial in 2007 and
2008 during the housing boom. A jury found Bank of America liable for
knowingly selling the bad loans to mortgage giants Fannie Mae and
Freddie Mac. The jury also returned the verdict against Countrywide and a
former executive, Rebecca Mairone.
U.S. attorney Preet Bharara
made the request for the penalty - the maximum allowed - in documents
filed Wednesday with the U.S. District Court in Manhattan.
America spokesman Lawrence Grayson said the government is seeking too
much money and has conceded that the losses from the loans were less
than $864 million.
"This claim bears no relation to a limited
Countrywide program that lasted several months and ended before Bank of
America's acquisition of the company," he said. "We will present the
relevant facts in a detailed response soon."
Countrywide, once the
biggest mortgage lender in the U.S., played a major role in the
collapse of the housing market because of its heavy reliance on subprime
mortgages. Facing serious financial challenges, it was acquired by Bank
of America in 2008 in an all-stock deal valued at about $4 billion.
Mae and Freddie Mac received about $187 billion in aid from taxpayers
when the government rescued them during the financial crisis, after they
incurred massive losses on risky mortgages.
The two companies
don't directly make loans to borrowers. They buy mortgages from lenders,
package them as bonds, guarantee them against default and sell them to
investors. That helps make loans available.
Grayson said Bank of America has until Feb. 26 to respond to the latest filing, and oral arguments are scheduled for March 13.