Lawyers for Bank of America have filed to overturn a jury verdict last year that held the bank liable for fraud over faulty mortgage-backed securities sold by its Countrywide unit.
In a motion filed Thursday, attorneys for the bank asked U.S. District Judge Jed Rakoff to either grant a new trial or overrule the fraud verdict made last by a 10-person jury last October.
The case revolves around mortgages originated through Countrywide's High Speed Swim Lane (HSSL, or "Hustle") program that were later sold to Fannie Mae and Freddie Mac. The complaint against BofA alleged that Countrywide—which the bank purchased in 2008—threw out quality controls in pursuit of higher volumes and then misrepresented those loans to the GSEs.
In their motion, BofA's lawyers argue the government failed to prove the loans involved in the case were advertised as being higher quality than they were.
"The trial evidence, even viewed in the light most favorable to the government, did not prove fraud under this standard," the motion reads. "Instead, the evidence unambiguously showed that the HSSL loans sold to Fannie and Freddie were well within industry standards for loan quality, and thus Fannie and Freddie received exactly what they paid for."
The filing comes nearly a month after Rakoff ordered BofA to pay nearly $1.3 billion for its role in the alleged fraud. BofA spokesperson Lawrence Grayson said at the time that it was reviewing its options to appeal, adding, "We believe that this figure simply bears no relation to a limited Countrywide program that lasted several months and ended before Bank of America's acquisition of the company."
The motion also follows the bank's historic $16.7 billion deal with the Justice Department to clear itself of charges that it misrepresented toxic securities sold to investors. That settlement was made separately from the fraud case.
In a separate motion, attorneys for former mid-level Countrywide executive Rebecca Mairone also pushed to overturn the verdict against their client, arguing that there was no proof given that she deliberately sought to defraud Fannie and Freddie. Mairone was ordered to pay $1 million for her alleged involvement.
"The jury's verdict should be set aside ... because there was insufficient evidence for the jury to conclude that Mairone knew of any HSSL loans that were sold to the GSEs as 'investment quality' despite being ineligible for sale," they said.