[ by Larry Goldfarb ]

Fraudulent Conduct Described as 'Spectacularly Brazen in Scope'.

Whether its due to the upcoming Presidential election or just the right time, Federal Prosecutors have awakened from their slumber and accused Bank of America ("BofA") of carrying out a mortgage scheme that defrauded the government during the depths of the financial crisis.  It's a civil complaint and prosecutors seek to collect $1 billion in damages. 

"Hustle":  Home Loan Program.   The Justice Department is taking aim at the unusually named loan program, a venture that has become emblematic of the risk-fueled mortgage bubble. The complaint adds to a flurry of federal and private lawsuits facing Bank of America's beleaguered mortgage business.

Not surprisingly, BofA inherited the "hustle" home loan program with its purchase of Countrywide Financial in 2008. 

The concept or objective:  to churn out mortgages at a rapid pace without conducting proper checks on wrongdoing. The bank then sold the potentially "defective" loans without warning to Fannie Mae and Freddie Mac, the government-controlled housing giants, which were stuck with heavy losses and a glut of foreclosed properties.

Preet Bharara, the United States attorney in Manhattan had this to say about the fraud:  "The fraudulent conduct alleged in today's complaint was spectacularly brazen in scope.  Mr. Bharara is trying the case with the Inspector General of the Federal Housing Finance Agency, which oversees Fannie Mae and Freddie Mac, and the government watchdog for the bank bailout program.

For all the grumbling about few criminal prosecutions, the government has now mounted dozens of civil cases against the nation's biggest financial firms, leaving the financial industry to battle a chaotic and somewhat redundant web of litigation. Mr. Bharara sued Wells Fargo this month over questionable mortgage deals. President Obama had formed a federal mortgage task force, which recently filed its first case against JPMorgan Chase over mortgage deals created by Bear Stearns, the defunct firm that JPMorgan bought during the crisis.

For more information, please read [NYT Dealbook, 10/24/12].