Bank of America boss Brian Moynihan must be ruing the day the bank laid eyes on Countrywide Financial.
Manhattan US attorney Preet Bharara slapped the bank with a $1 billion lawsuit today, alleging that Countrywide, which BofA acquired at the height of financial crisis in 2009, churned out thousands of fraudulent and defective home loans.
The civil suit claims that Countrywide turned around and sold the toxic loans that later defaulted to government-backed mortgage giants Fannie Mae and Freddie Mac.
Countrywide implemented a loan program, called “Hustle,” that was “designed to process loans at high speed and without quality checkpoints,” according to the suit.
Bharara says it is the first civil fraud suit brought by the Justice Department involving loans sold to Fannie and Freddie, which required massive government bailouts to stay afloat.
The suit comes just weeks after BofA agreed to pay $2.43 billion to settle a class-action suit accusing it of misleading investors about Merrill Lynch’s financial condition during their hasty merger during the crisis.
This latest suit brings the bank’s potential mortgage and litigation-related tally to roughly $31 billion.
BofA shares were up less than one percent at $9.43. A spokesman for BofA was unable to comment.
mark.decambre@nypost.com