The legal technicality that let BofA skate on an alleged billion-dollar mortgage fraud

The legal technicality that let BofA skate on an alleged billion-dollar mortgage fraud - LA Times: "...The program transferred responsibility for vetting the loans "from quality-focused underwriters to volume-focused loan specialists" using automated credit software, eliminated rules that effectively reduced commissions for low-quality loans, and cut the turnaround time for processing mortgages to 15 days from six weeks or more.
With speed and volume taking precedence over quality, a huge percentage of these loans was destined to be lousy.
Sure enough, more than 42% of the loans were "materially defective," Rakoff found.
As far as Fannie and Freddie knew, however, they all still met Countrywide's contractual representation that all the loans were "investment quality."
Instead, Rakoff wrote, HSSL "was from start to finish the vehicle for a brazen fraud...driven by a hunger for profits and oblivious to the harms thereby visited, not just on the immediate victims but also on the financial system as a whole."
Fannie and Freddie, he concluded, "would never have purchased any loans from the Bank Defendants if they known that Countrywide had intentionally lied to them."
So how, you might ask, could Bank of America wriggle out of that one?
The answer is through what Kelleher calls a "hyper-technical decision."
The judges based their ruling on the contracts that Countrywide had reached with Fannie and Freddie, pledging to provide those government-sponsored firms with "investment quality" mortgages.
There was no evidence, the appellate judges found, that the executives who signed those contracts intended at the time to stuff the pipeline with toxic junk.
It just turned out that way..."