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Bank of America found liable for Countrywide’s $850M in fraud

When Bank of America acquired Countrywide in 2008, they also acquired their problems. And fraud.

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Bank of America found liable for Countrywide “Hustle” program

Bank of America has been found by a federal jury to be liable for the Countrywide Financial “Hustle” program, wherein Countrywide employees knowingly sold bad home loans to Fannie Mae and Freddie Mac. The penalties the bank now faces could approach $850 million, not to mention a $40 billion in court costs they’ve racked up since the 2008 acquisition of Countrywide.

The lawsuit named Bank of America, and former Countrywide executive, Rebecca Mairone, alleging that the “Hustle” program (which stood for the “High Speed Swim Lane”) was a deliberate move to do away with the standard challenges of loan approval, and that ignoring these underwriting standards and safeguards, Countrywide was able to quickly sign off on millions of dollars worth of loans they would never have been able to make otherwise. The most damming allegation is that Countrywide set this program up so they could sell the home loans to unsuspecting Fannie and Freddie in short order.

$850M in loans defaulted, feds say

Nearly half of all loans sold by Countrywide as part of the Hustle defaulted, leaving their new owners at Bank of America holding the bag. The federal jury found Bank of America liable on one civil fraud charge of deceiving Fannie and Freddie and failing to disclose their illegal process. The $850 million penalty the Department of Justice (DOJ) is requesting is the amount Fannie and Freddie lost on these loans.

Initially, under the False Claims Act, triple damages were sought, claiming that Countrywide made fraudulent claims for payment to government officials, but because Bank of America lawyers successfully argued that Hustle ended before Fannie and Freddie were bailed out by the government, the judge dismissed the charges.

Bank of America continues to assert that Hustle ended before they acquired Countrywide, and has stated that the original intent of the program was to expedite, not skirt the home loan process. They will likely appeal the jury’s decision.

Focus on Rebecca Mairone

Former Countrywide executive, Rebecca Mairone is now at JPMorgan Chase, overseeing the foreclosure-review department who, despite yesterday’s ruling finding her guilty of civil fraud, maintains her innocence.

Dr. L. Randall Wray, Professor of Economics at the University of Missouri-Kansas City and Senior Scholar at the Levy Economics Institute of Bard College, details his public battle with Mairone a few years back when he published a piece in the Huffington Post calling for Bank of America to be put into receivership, and Mairone was tasked to counter in the same publication.

Dr. Wray points out that Mairone failed to address any of the allegations he made of illegal behavior. “Stop the fraudsters,” Dr. Wray writes. “Stop the foreclosures. There should be an immediate 5 year Country-Wide moratorium on foreclosures. Investigate the fraud. Jail the fraudsters. Put the biggest banks into receivership. Begin to clean-up the document mess created by the banks and MERS (the banks lost or destroyed all the records of property ownership). Our economy will not recover until this is done.”

Tara Steele is the News Director at The American Genius, covering entrepreneur, real estate, technology news and everything in between. If you'd like to reach Tara with a question, comment, press release or hot news tip, simply click the link below.

Austin

Austin tops the list of best places to buy a home

When looking to buy a home, taking the long view is important before making such a huge investment – where are the best places to make that commitment?

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Looking at the bigger picture

(REALUOSO.COM) – Let us first express that although we are completely biased about Texas (we’re headquartered here, I personally grew up here), the data is not – Texas is the best. That’s a scientific fact. There’s a running joke in Austin that if there is a list of “best places to [anything],” we’re on it, and the joke causes eye rolls instead of humility (we’re sore winners and sore losers in this town).

That said, SelfStorage.com dug into the data and determined that the top 12 places to buy a home are currently Texas and North Carolina (and Portland, I guess you’re okay too or whatever).

They examined the nerdiest of numbers from the compound annual growth rate in inflation-adjusted GDP to cost premium, affordability, taxes, job growth, and housing availability.

“Buying a house is a big decision and a big commitment,” the company notes. “Although U.S. home prices have risen in the long term, the last decade has shown that path is sometimes full of twists, turns, dizzying heights and steep, abrupt falls. Today, home prices are stabilizing and increasing in most areas of the U.S.”

Click here to continue reading the list of the 12 best places to buy a home…

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Housing News

Average age of houses on the rise, so is it now better or worse to buy new?

With aging housing in America, are first-time buyers better off buying new or existing homes? The average age of a home is rising, as is the price of new housing, so a shift could be upon us.

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The average home age is higher than ever

(REALUOSO.COM) – In a survey from the Department of Housing and Urban Development American Housing Survey (AHS), the median age of homes in the United States was 35 years old. In Texas, homes are a bit younger with the median age between 19 – 29 years. The northeast has the oldest homes, with the median age between 50 – 61 years. In 1985, the median age of a home was only 23 years.

With more houses around 40 years old, the National Association of Realtors asserts that homeowners will have to undertake remodeling and renovation projects before selling unless the home is sold as-is, in which case the buyer will be responsible to update their new residence. Even homeowners who aren’t selling will need to consider remodeling for structural and aesthetic reasons.

Prices of new homes on the rise

Newer homes cost more than they used to. The price differential between new homes and older homes has increased from 10 percent traditionally to around 37 percent in 2014. This is due to rising construction costs, scarcity of lots, and a low inventory of new homes that doesn’t meet the demand.

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Housing News

Are Realtors the real loser in the fight between Zillow Group and Move, Inc.?

The last year has been one of dramatic and rapid change in the real estate tech sector, but Realtors are vulnerable, and we’re worried.

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Why Realtors are vulnerable to these rapid changes

(REALUOSO.COM) – Corporate warfare demands headlines in every industry, but in the real estate tech sector, a storm has been brewing for years, which in the last year has come to a head. Zillow Group and Move, Inc. (which is owned by News Corp. and operates ListHub, Realtor.com, TopProducer, and other brands) have been competing for a decade now, and the race has appeared to be an aggressive yet polite boxing match. Last year, the gloves came off, and now, they’ve drawn swords and appear to want blood.

Note: We’ll let you decide which company plays which role in the image above.

So how then, does any of this make Realtors the victims of this sword fight? Let’s get everyone up to speed, and then we’ll discuss.

1. Zillow poaches top talent, Move/NAR sues

It all started last year when the gloves came off – Move’s Chief Strategy Officer (who was also Realtor.com’s President), Errol Samuelson jumped ship and joined Zillow on the same day he phoned in his resignation without notice. He left under questionable circumstances, which has led to a lengthy legal battle (wherein Move and NAR have sued Zillow and Samuelson over allegations of breach of contract, breach of fiduciary duty, and misappropriation of trade secrets), with the most recent motion being for contempt, which a judge granted to Move/NAR after the mysterious “Samuelson Memo” surfaced.

Salt was added to the wound when Move awarded Samuelson’s job to Move veteran, Curt Beardsley, who days after Samuelson left, also defected to Zillow. This too led to a lawsuit, with allegations including breach of contract, violation of corporations code, illegal dumping of stocks, and Move has sought restitution. These charges are extremely serious, but demanded slightly less attention than the ongoing lawsuit against Samuelson.

2. Two major media brands emerge

Last fall, the News Corp. acquisition of Move, Inc. was given the green light by the feds, and this month, Zillow finalized their acquisition of Trulia.

…Click here to continue reading this story…

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