A federal judge has denied Bank of America’s request to overturn a jury’s verdict that found it liable for fraud over mortgages made in a program nicknamed “Hustle.”
In July, Judge Jed Rakoff in Manhattan ordered the Charlotte-based bank to pay $1.27 billion in civil penalties after a jury in 2013 found it liable for fraud over loans sold to mortgage giants Fannie Mae and Freddie Mac. The mortgages were made under a program operated by Countrywide Financial Corp., which the bank bought in 2008.
On Tuesday, Rakoff denied requests by the bank and former Countrywide executive Rebecca Mairone for a new trial or to have the verdict overturned.
“Defendants have utterly failed to meet their burden on either motion,” Rakoff wrote.
The jury also found Mairone liable for her role in the Hustle program. In July, Rakoff ordered Mairone to pay a penalty of $1 million.
“We respectfully disagree with the court’s ruling, and are quite optimistic about our chances on appeal,” said Marc Mukasey, an attorney representing Mairone.
The government argued that the program generated loans with a focus on speed and volume over quality. Countrywide, the government claimed, marketed the loans as investment grade despite their poor quality.
Bank of America’s request for a new trial or to overturn the jury’s decision was a step it could take before filing a formal appeal.
Bank of America spokesman Lawrence Grayson said Tuesday that the bank plans to file an appeal.