Bank of America Corp (NYSE:BAC) Appeals $1.3bn Toxic Loan Penalty

Bank of America Corp (NYSE:BAC) made an appeal against a hefty $1.3 billion penalty imposed by Judge Jed Rakoff. The penalty was issued for claims that the company had been issuing unhealthy home loans.

The bank made the appeal citing that the court had denied it access to a proper defense against the claims. The case was presented against the company or issuing bad credit during the financial crisis and the period after that. The bank made a claim that it had not been given the opportunity to present vital evidence about the loans in question. BofA claimed that it had acquired the loans in a purchase contract entered with a California based Mortgage coordinator back in 2008. The bank also said that the loans were characterized as high-quality loans at the time of purchase.

One of the complaints that the bank made was a claim that the court failed to include significant testimonies from witnesses. BofA purported that the people who made these testimonies substantial knowledge about the authenticity and good quality of the loan program.

Bank of America Corp (NYSE:BAC) sought protection from the Financial Institutions Reform, Recovery, and Enforcement Act to challenge the judicial decision made against it. The act is supposed to shield financial institutions from the transgressions made by other individuals or institutions. The act cites penalties to the tune of $1.1 million. This would greatly reduce the current denting fine being imposed on the bank. The bank wrote a note that described the whole trial as unfair and unexpected.

The Justice Department imposed the lawsuit on BofA in October 2012. The bank was accused of carrying out civil fraud through the sale of lawed loans to mortgage firms. The accusations alleged that the bank failed to check the loan quality especially due to the speedy process that the bank had incorporated in handling them.

Bank of America decided not to settle with the judicial decision but rather go to trial. The Judge’s decision was inclined by the speedy manner in which the bank carried out the whole process.

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Published by Pamela Garcia

Pamela Garcia is a keen follower of U.S. stock market

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