Updated with JPMorgan declining comment.
NEW YORK (
) -- A Countrywide executive mentioned in the U.S. lawsuit against
Bank of America
Wednesday for allegedly ignoring warnings about the firm's defective loan origination process is now a home lending executive at
Rebecca Mairone was Chief Operating Officer at Countrywide's Full Spectrum Lending Unit, which implemented a new origination process called "Hustle" to fast track the underwriting and processing of loans to boost volume and revenue.
According to her
, Mairone has been with JPMorgan since March 2012. Her title is listed as Home Lending Executive, Managing Director at JPMorgan Chase.
Calls to Mairone's office at JPMorgan were directed to the bank's communications office. JPMorgan declined to comment.
According to a complaint filed by the U.S. Department of Justice Wednesday, the "Hustle" origination process resulted in billions of dollars of defective loans.
Internal quality control checks at Countrywide revealed that the origination process was creating highly defective loans that would not meet GSE standards, but Mairone and Greg Lumsden, President of the unit, allegedly ignored those findings.
The U.S. Department of Justice
sued Bank of America on Wednesday for over $1 billion for alleged multi-year mortgage fraud against government-sponsored entities
The complaint alleges that from at least 2007 to 2009, "Countrywide and later Bank of America, following the acquisition of Countrywide in 2008, implemented a new origination process called "Hustle", which was intentionally designed to process loans at high speed and without quality checkpoints, and which generated thousands of fraudulent and otherwise defective residential mortgage loans sold to Fannie Mae and Freddie Mac that later defaulted causing over $1 billion dollars in losses and countless foreclosures."
Manhattan attorney Preet Bharara called the fraud "spectacularly brazen" in scope, but he fell short of naming individual officials as defendants in his lawsuit, much to the chagrin of critics yearning for some accountability from Wall Street execs who fueled the crisis.
complaint does allege that two former officials at Countrywide's Full Spectrum Lending (FSL) unit, President Greg Lumsden and Chief Operating Officer Rebecca Mairone, were repeatedly warned that the unit's "Hustle" origination process would produce defective loans that were ineligible for sale to the GSEs and that the executives ignored these warnings.
Internal quality reviews also confirmed that the quality of the loans originated were poor, according to the complaint. However, the officials ignored the information and continued with Hustle as planned and restricted the dissemination of the quality reviews, the complaint alleged.
When a senior manager Edward O'Donnell, concerned about the high defect rates, offered to conduct quality checks, Mairone permitted them to be conducted in parallel so as to not "slow down" the fast approval of loans, the lawsuit charges. According to the division's internal reports, in January 2008, FSL's rates of materially defective loans were 57% overall.
Still, "Rather than alter or abandon the Hustle model, FSL's COO prohibited O'Donnell's teams from circulating the pre-funding quality reports outside of FSL," the complaint said.
Mairone was Countrywide Financial's Chief Operating Officer between February 2006 and June 2008. After the firm's takeover in 2008, she became National Retail Operations Sales Executive at Bank of America and later a National Mortgage Outreach Executive at the bank.
Mairone testified before the House Financial Services Committee in 2010 as the default servicing executive of Bank of America regarding the firm's handling of delinquent loans.
In an article in the
Huffington Post that same year , she defended the bank's foreclosure record.
As for the other exec named in the complaint, Greg Lumsden, all we can gather from his
LinkedIn profile is that he is now an "independent mortgage consultant" and runs a training program for kid golfers.
Written by Shanthi Bharatwaj in New York.
Disclosure: TheStreet's editorial policy prohibits staff editors and reporters from holding positions in any individual stocks.