| NEW YORK
NEW YORK Jan 31 The U.S. Justice Department has
added a former top executive at Countrywide Financial Corp as a
defendant in a lawsuit accusing Bank of America Corp of
causing taxpayers $1 billion in losses to Fannie Mae
and Freddie Mac.
Rebecca Mairone was added as a defendant in an amended civil
lawsuit dated Jan. 11 and filed in U.S. District Court in New
York. The filing was not made available in electronic court
records until later in the month.
The complaint says it was at Mairone's direction that the
bank implemented a program to speed up the processing of home
loans and remove barriers intended to ensure loans are not
tainted by fraud. The program was known internally at
Countrywide as the "Hustle," the Justice Department said in the
Mairone is now a managing director at JPMorgan Chase & Co
. In a statement on Thursday, her lawyer said the
government "has trumped up a meritless civil case."
"Rebecca Mairone has always been a loud voice for ethics and
integrity in the mortgage business and she will be vindicated
because she never did anything improper," said Marc Mukasey, of
law firm Bracewell & Giuliani.
A spokeswoman for U.S. Attorney Preet Bharara declined
The new complaint was first reported by The Huffington Post.
The original complaint was filed in October. It accused Bank
of America and Countrywide of engaging in a scheme to defraud
Fannie and Freddie through its sale of toxic mortgage loans to
the two mortgage financing entities. Both Fannie and Freddie
were taken into government conservatorship in
Mairone was the chief operating officer for a Countrywide
lending division from 2007 to 2008. She continued to be employed
at Bank of America after it bought Countrywide in 2008, the
Under her, Countrywide implemented the "Hustle" program, at
a time when loan default rates nationally were climbing and
Fannie and Freddie were tightening their standards for buying
loans, according to the complaint.
Mairone and other Countrywide executives were "repeatedly
warned" by employees that the program would generate excessive
amounts of fraudulent or defective loans ineligible for sale to
Fannie and Freddie, the complaint said.
The complaint seeks unspecified civil penalties against
Mairone under the Financial Institutions Reform, Recovery, and
Enforcement Act. The law was passed in the wake of the 1980s
savings-and-loan scandals and covers fraud affecting federally
insured financial institutions.
Lawrence Grayson, a spokesman for Bank of America, said the
bank viewed the government's latest legal theories in the new
complaint as "equally unfounded" as the original ones. Bank of
America has sought to have the case against it dismissed.
Grayson said that "neither Bank of America nor Countrywide
defrauded Fannie Mae or Freddie Mac."
The case is U.S. ex rel. O'Donnell v. Bank of America Corp
et al, U.S, District Court, Southern District of New York, No.