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Posted: 4:42 p.m. Thursday, Oct. 24, 2013
By Jim Bradley
CHARLOTTE, N.C. —
Thursday, a judge will decide when a penalty phase will begin for an unprecedented case against Bank of America. A jury ruled Wednesday that the Charlotte-based bank is liable for mortgage fraud. A banking expert told Channel 9 this could mean more lawsuits, penalties and fines for Bank of America. This case could cost $850 million in penalties. "It's significant because it's the first time the government has won a trial; won a court case against a bank for civil fraud," said Tony Plath, a banking expert. The government accused Countrywide, which is owned by Bank of America, of mortgage fraud. It said Countrywide threw out quality checks, churned out loans and sold bad mortgages to Fannie Mae and Freddie Mac. "Countrywide has been a disastrous purchase," said John Connaughton. "Every time they turn a rock over, something else crops up." In a BofA statement, it said, "The jury's decision concerned a single Countrywide program that lasted several months and ended before Bank of America acquired the company." But Connaughton said the bank hasn't been able to shake the Countrywide stigma. "BofA has done an incredibly bad job of managing the message here," Connaughton said. Experts said BofA's loss in court could make it vulnerable in other cases. "We don't know how much this is actually going to cost," Plath said. "The significance here is that the crisis isn't beginning to abate and unwind; it continues."
Read more about BofA's case here.
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