This civil fraud suit alleges that Countrywide sold loans to Fannie Mae that did not meet the underwriting standards set by Fannie Mae. Countrywide was aware of the fraudulent loans that it sold, and even took steps to increase the volume of the bad loans. Fannie Mae did not sample the loans that it purchased from Countrywide for conformity to its underwriting standards. It took Countrywide's certification for conformity at face value. Bank of America acquired Countrywide during the financial crisis and it is responsible for payment on the civil fraud suit.
Its good to see federal prosecutor's doing their job, but no criminal charges have been made against Countrywide executives. Countrywide's CEO was fined by the government in a prior civil suit but much of his financial penalty was paid for by his insurance and Countrywide paid his legal bills. He is worth hundreds of millions despite his fraudulent behavior. From a purely cost- benefit analysis he did just what he should have done in his capacity as CEO. He maximized his financial gain with little downside risk to himself. Countrywide creditors and shareholders, along with US taxpayers took the hit.
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