Today, the U. S. Attorney for the S.D.N.Y. filed a complaint-in-intervention in the whistleblower case originally filed under seal by Edward O’Donnell against Bank of America (as successor to Countrywide).  The complaint alleges a scheme to defraud Fannie Mae and Freddie Mac (so-called “GSE’s”) in connection with Countrywide’s residential mortgage lending business:

[I]n 2007, as loan default rates rose across the country and the GSEs reevaluated their loan purchase requirements, Countrywide rolled out a new “streamlined” loan origination model it called the “Hustle.”  In order to increase the speed at which it originated and sold lonas to the GSEs, Countrywide eliminated every significant checkpoint on loan quality and compensated its employees solely based on the volume of loans originated, leading to rampant instances of fraud and other serious loan defects, all while i was informing the GSEs that it had tightened its underwriting guidelines.

The complaint alleges that as a result of the “Hustle” (also known as “HSSL” for “High Speed Swim Lane”) the GSEs incurred more than a billion dollars in losses when the “hustled” loans “predictably defaulted.”  According to Law.com, Williams & Connolly and Goodwin Procter are representing Bank of America in the case, which is pending before Judge Rakoff.