The US District Judge Jed Rakoff ruling comes after a federal jury found last year the Countrywide Financial as liable for committing fraud when it created the ‘High Speed Swim Lane’ (HSSL) or ‘Hustle’ program, to accelerate the production and sale of loans to state-backed mortgage companies Fannie Mae and Freddie Mac.
The ruling also ordered former Countrywide Financial executive Rebecca Mairone, who led the program, to pay $1m.
Rakoff said: "While the HSSL process lasted only nine months, it was from start to finish the vehicle for 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 ruled that the Fannie Mae and Freddie Mac paid around $3bn to Countrywide for 17,611 mortgage loans.
The penalty is below the $2.1bn sought by the US Government as the parties agreed that more than half the loans sold were risky mortgages.
BofA spokesperson said: "We believe that this figure simply bears no relation to a limited Countrywide programme 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."
The case was initiated after a former Countrywide executive Edward O’Donnell issued a complaint over alleged fraud.
