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NEW YORK — A Bank of America subsidiary was ordered to pay nearly $1.3 billion Wednesday for a program that caused heavy losses to federally-backed mortgage finance giants Fannie Mae and Freddie Mac amid fallout from the financial crisis.

U.S. District Judge Jed Rakoff imposed the fine on the Countrywide Financial unit for risky mortgages sold through a program informally dubbed "The Hustle" or "The High Speed Swim Lane."

The judge also ordered Rebecca Mairone, a bank employee involved in running the loan program, to pay $1 million for her role.

The financial penalties stem from an October 2013 civil verdict by a Manhattan federal court jury that found Countrywide financially liable for the program which processed thousands of mortgage applications at high speed with little checking for fraud, misrepresentations or other problems. The jury also found Mairone liable.

Charlotte, N.C.-based Bank of America, the nation's second-largest bank, acquired Countrywide in July 2008 amid fallout from the financial crisis. Countrywide created the Hustle program, officially known as the HSSL, in 2007 as the real estate market started to collapse and the market for sub-prime mortgage loans dried up.

The program was purportedly aimed at handling higher volumes of prime mortgage loans, which generally are made to borrowers who have high credit ratings and can afford larger down payments. But federal prosecutors argued that the program was actually intended to have loans "move forward, never backward," and to remove "toll gates" that could slow the mortgage approval process.

"While the HSSL process lasted only nine months, it was from start to finish a brazen fraud by the defendants, 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," Rakoff wrote in a 19-page decision.

There was also "convincing evidence" that Mairone "most aggressively pushed forward the HSSL fraud and most scathingly denounced those who raised concerns," the judge added.

Bank of America is reviewing the ruling and assessing a potential appeal, said spokesman Lawrence Grayson. "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," said Grayson.

The bank may be able to convince a federal appeals court "that the penalty is too large for what it did or that the penalty was not properly calculated under a rather new statute that few judges have interpreted," said Carl Tobias, a University of Richmond law professor.

Marc Mukasey, Mairone's defense attorney, said "we continue to maintain that Rebecca never intended to defraud anyone and never did defraud anyone. "Unfortunately, more powerful people chose her as a scapegoat because they thought she was an easy target. We will fight on to clear her name."

Fannie Mae and Freddie Mac ultimately paid Countrywide nearly $3 billion for 17,611 mortgage loans generated by the program in 2007-2008, Rakoff ruled. That total represents "the proper measure of both loss and gain in the case," he wrote.

Denying the government's request for the maximum $2.1 billion in fines, Rakoff reduced the penalty because both sides in the case agreed that more than half the loans had acceptable risk levels.

Civil lawsuit: Oct. 2013 verdict

The outcome came in the first mortgage fraud case brought by the federal government that went to a trial and jury verdict.

Manhattan U.S. Attorney Preet Bharara said the ruling "squarely and emphatically rejects the bank's claims which, besides ignoring the victims' out-of-pocket losses, also ignored that the fraudulent conduct required penalties to be paid for punitive and deterrence purposes as well."

Separately, Bank of America is negotiating a potentially far more costly settlement with the Department of Justice and state Attorneys General over investigations of risky mortgage-backed securities.

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