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A Bank of America Merrill Lynch sign is seen on a building that houses its offices in Singapore May 17, 2012. CREDIT: REUTERS/TIM CHONG

Bank of America ordered to pay $1.27 billion for Countrywide fraud

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A federal judge on Wednesday ordered to pay $1.27 billion of damages after a federal jury found the second-largest U.S. bank liable for fraud over defective mortgages sold by its Countrywide unit.

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The decision by U.S. District Judge Jed Rakoff in Manhattan came nine months after jurors found Bank of America and former Countrywide executive Rebecca Mairone liable for defrauding government-controlled mortgage companies and through the sale of shoddy Countrywide loans in 2007 and 2008.

Rakoff said Fannie Mae and Freddie Mac bought $2.96 billion of questionable loans. He said the $1.27 billion damages award reflected a finding by a government expert that only some of the loans had material defects, while others were acceptable.

Lawrence Grayson, a Bank of America spokesman, said with regard to the award: "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. We're reviewing the ruling, and will assess our appellate options."

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