Robert C. Hockett, Professor of Law at Cornell University and an expert on real estate finance, banking, and financial regulation, comments on the U.S. Department of Justice $1 billion lawsuit against Bank of America. The suit claims that Countrywide, a mortgage originating firm purchased by the bank committed fraud by selling thousands of defective mortgage loans to government-backed mortgage firms Fannie Mae and Freddie Mac.
He says:
“Wednesday’s announced Department of Justice suit against Bank of America for mortgage-related fraud — like other recent suits against Wells Fargo and JP Morgan Chase announced earlier this month — highlights an important but under-appreciated fact about the recent housing bubble years. That is the way in which abuses in the mortgage-origination and securitization industries have bilked borrowing homeowners and ultimate lenders alike.
“People dismayed by our still ongoing home mortgage loan troubles should not be demonizing borrowers or investors, who are equally victimized. Instead we should fix our attention on those who have swindled both parties. Those are the 'pump and dump' mortgage-origination and securitization industries.”
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