Bank of America wins reversal of $1.27 billion penalty in US mortgage case – CNBC

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A U.S. appeals court on Monday threw out Bank of America‘s $1.27 billion penalty in a fraud case over defective mortgages, dealing the U.S. Justice Department a major setback in a lawsuit related to the 2008 financial crisis.

The 2nd U.S. Circuit Court of Appeals in New York said the proof at trial was insufficient under federal fraud statutes to establish liability in connection with the “Hustle” mortgage program, which was run at the former Countrywide Financial.

Bank of America, in a statement, said it was pleased with the ruling. A spokesman for Manhattan U.S. Attorney Preet Bharara, whose office oversaw the lawsuit and took it to trial, had no immediate comment.

The ruling overturns a 2013 jury verdict in a lawsuit by the Justice Department against Bank of America, which bought Countrywide in July 2008, and Rebecca Mairone, a former midlevel Countrywide executive.

The jury found the bank liable for Countrywide’s sale of shoddy loans originated by its “High Speed Swim Lane” program, also called HSSL or Hustle. The loans were sold to mortgage finance giants Fannie Mae and Freddie Mac

Bank of America wins reversal of $1.27 billion penalty in US mortgage case – CNBC