Journalism in the Public Interest

Exec Who Allegedly Enabled Fraud Runs Chase’s Effort to Compensate Foreclosure Victims

A former Countrywide and Bank of America executive named by Justice Department lawyers as facilitating a scheme to defraud Fannie Mae and Freddie Mac now heads JPMorgan Chase’s involvement in the Independent Foreclosure Review.


Rebecca Mairone, then at Bank of America, testifies to the Housing and Community Opportunity Subcommittee in Washington, D.C., on Nov. 18, 2010. Mairone now heads JPMorgan Chase's involvement in the Independent Foreclosure Review. (Joshua Roberts/Bloomberg via Getty Images)

An executive who the Justice Department says facilitated a scheme to defraud Fannie Mae and Freddie Mac is now spearheading JPMorgan Chase's role in the government's program to compensate victims of the big banks' abusive foreclosure practices.

The executive, Rebecca Mairone, worked at Countrywide and Bank of America from 2006 until earlier this year, when she left for JPMorgan Chase, according to her LinkedIn profile.

In a lawsuit filed last month in federal court in New York, Justice Department attorneys allege that Countrywide, which was bought by Bank of America in 2008, perpetrated a two-year scam to foist shoddy home loans on Fannie and Freddie. Neither Mairone nor any other individuals are named as defendants in the civil suit, and no criminal charges have been filed against her or anyone else in connection with the alleged misconduct. But Mairone is one of two bank officials cited in the suit as having repeatedly ignored warnings about the "Hustle," as the alleged scheme was called inside the company, and she prohibited employees from circulating some of those warnings outside their division.

Mairone was chief operating officer of the Countrywide lending division that allegedly carried out the "Hustle." She took the helm of JPMorgan Chase's involvement in the Independent Foreclosure Review this summer, according to a former Chase employee.

The review, overseen by federal banking regulators, requires the nation's biggest banks to compensate victims for harm they inflicted on borrowers. Victims can receive up to $125,000 in cash or, in some cases, get their homes back. But the review has already been marred by evidence that the banks themselves play a major role in identifying the victims of their own abuses, raising the question of whether the review is compromised by a central conflict of interest.

Mairone's role raises additional questions about the Independent Foreclosure Review.

The review "never seemed designed to place first the interests of those who were supposed to be helped — victimized homeowners," said Neil Barofsky, the former federal prosecutor who served as the special inspector general for the Troubled Asset Relief Program, better known as the bank bailout.

"Finding out that the person running it for JPMorgan Chase is a person whose conduct in the run-up to financial crisis was allegedly so egregious that she somehow managed to be one of the only people actually named in a case brought by the Department of Justice goes beyond irony," he continued. "It speaks volumes to the banks' true intent and lack of concern for homeowners when addressing the harm that they caused during the foreclosure crisis."

In response to ProPublica's questions about Mairone's role in the foreclosure review and the suit's allegations, Chase issued a brief statement confirming that Mairone is a managing director who is "working on the Independent Foreclosure Review process." The statement added, "It would not be appropriate for us to discuss another firm's litigation."

Chase declined to make Mairone available for comment, and she did not return a message left at her home number.

The Suit's Allegations

Countrywide was the industry leader in subprime loans, which are typically given to borrowers with a troubled credit history. In 2007, the subprime market began to collapse as more and more of those borrowers defaulted on their loans. Countrywide grew desperate to find ways to keep profiting from issuing mortgages.

Fannie and Freddie guarantee home loans, relieving banks of the risk that borrowers will default. So in 2007, the government's suit alleges, Countrywide began the Hustle to pass a huge number of risky loans, many with phony incomes attributed to the borrowers, on to Fannie and Freddie.

At that time, the two mortgage giants were restricting their underwriting guidelines, making it harder for lenders like Countrywide to find borrowers who qualified for Fannie and Freddie backed loans.

The suit alleges that Countrywide deliberately gutted its system for detecting unqualified borrowers, leading to a flood of flawed and outright fraudulent loans backed by Fannie and Freddie.

The new modus operandi was called the "High Speed Swim Lane"; its motto was "Loans Move Forward, Never Backward," according to the suit. The company allegedly paid bonuses to its employees based on the number of loans they pushed through, not on whether the loans were sound. According to the suit, the new system created a torrent of loans that often featured inflated borrower incomes, accelerated by employees who had every incentive to fabricate numbers to get the loans into the "High Speed Swim Lane."

The suit says a number of employees within Countrywide raised alarms about the Hustle before it launched, but that Mairone and the division's president "ignored" those warnings.

Once the new system was up and running, one concerned executive had underwriters run checks on the loans. Mairone allowed the checks, but said they should be run in parallel to the loan funding process so, according to the suit, they didn't "'slow the swim lane down.'"

The tests found a "staggering rate of defects," the suit says, but Mairone did not "alter or abandon the Hustle model." Instead, the suit alleges, she "prohibited" underwriters from circulating the results outside of the lending division. "As warnings about the Hustle went unheeded," the complaint alleges, "Countrywide knowingly churned out loans with escalating levels of fraud and other serious material defects and sold them to" Fannie and Freddie.

The Hustle continued "through 2009," the Justice Department alleges, well after Bank of America acquired Countrywide. The scheme led to more than $1 billion in losses at Fannie and Freddie as borrowers defaulted, according to the suit.

The government took over Fannie and Freddie in 2008, and since then taxpayers have pumped in $187.5 billion to keep them afloat.

The federal suit was first brought under seal as a qui tam suit under the False Claims Act by a former Countrywide and Bank of America executive, Edward O'Donnell, who says he tried to stop the Hustle. A qui tam suit allows a private citizen to sue on behalf of the government and receive a portion of the settlement or judgment if the suit is successful. The Justice Department joined O'Donnell's suit in October in Southern District of New York, filing its own complaint and trumpeting it in a press release.

A Bank of America spokesman disputed allegations in the suit that it had refused to repurchase the faulty "Hustle" loans from Fannie Mae after they defaulted in large numbers. "Bank of America has stepped up and acted responsibly to resolve legacy mortgage matters," said spokesman Lawrence Grayson. "At some point, Bank of America can't be expected to compensate every entity that claims losses that actually were caused by the economic downturn."

A Career Spans the Crisis

Mairone's career has spanned the entire life cycle of the foreclosure crisis.

After working for Countrywide and Bank of America's lending divisions, Mairone moved to the bank's servicing division in 2009. There, at the height of the crisis, she was in charge of deciding how to deal with homeowners who could not pay their mortgages and wanted to modify the terms of their loans.

It didn't go well. The big banks all signed up for the government's main foreclosure prevention program and agreed to provide modifications for qualified borrowers. But as we've reported over the years (we even interviewed Mairone herself in early 2011), the biggest banks often botched loan modifications and regularly subjected customers to errors and abuses, some resulting in mistaken foreclosures. The big banks in general did a poor job, but analyses have shown that Bank of America performed the worst of all. Homeowners had less of a chance of getting a modification from Bank of America than any other major mortgage servicer, studies show.

Such failings eventually led to government efforts to compensate homeowners for the banks' errors and abuses. The Federal Reserve and the Office of the Comptroller of the Currency launched the Independent Foreclosure Review in late 2011. About 4.4 million homeowners are eligible for the review, and those who are determined to have been harmed can receive up to $125,000 in cash compensation.

Regulators required each of the banks to hire an outside consultant to independently conduct the review, but as ProPublica has reported, there is abundant evidence that the banks themselves are playing a large role. The program has also been marked by low participation by borrowers and a lack of transparency.

Regulators have said the banks are only playing a supporting role in the review, and that the consultants are entirely responsible for deciding how borrowers are compensated.

Mairone's current employment at Chase was first reported by The Street, an online news service that covers finance, but the story did not say Mairone was working on the bank's Independent Foreclosure Review. She oversees hundreds of Chase employees who gather documents for the reviews, according to the former Chase employee. Chase declined to say how many employees Mairone oversees or detail her job responsibilities.

Chase's main regulator, the Office of the Comptroller of the Currency, said its policy is not to comment on specific individuals or ongoing litigation. "The OCC and the Federal Reserve are monitoring the conduct of the Independent Foreclosure Review to ensure reviews are conducted fairly and thoroughly," said spokesman Bryan Hubbard.

Jonathan Gandal, a spokesman for Deloitte, the consultant Chase hired for the review, said, "We are conducting an independent review of the files and it is our review and analysis alone that will drive our recommendations. Beyond that, we are not at liberty to discuss matters pertaining to our services."

Barry Schmittou

Nov. 9, 2012, 4:13 p.m.

Financial Crime Patterns of JP Morgan Chase and others :

AIG, JP Morgan, JPMorgan Chase, Prudential, MetLife, and Unum Commit Identical Crimes !! No One is Prosecuted by Obama’s DOJ, DOL, and SEC !!

All the corporations in the long list below (including Bank of America, JP Morgan Chase, Citi Bank, Wells Fargo, and GMAC) settled for identical violations including :

(a) providing false or misleading information to consumers (b) misrepresenting to borrowers (c) failing to provide accurate and timely information to borrowers (d) misrepresenting the identity, office, or legal status of the affiant (e)  inappropriately charging servicing document creation

Please view

Goldman Sachs, Bank of America, JP Morgan Chase, Magnetar and many more helped crash the U.S. and world economy by engaging in the following identical crimes :

(1) Combining loans that were likely to fail into packages known as collateralized debt obligations, or CDOs
(2) They fraudulently misrepresented the ratings of these bundled loans as being top rated A+ loans and sold the CDO’s to investors
(3) At the same time they placed financial bets that these bundles would fail (these reverse bets are referred to as shorting in the government documents below)
(4) They reaped huge profits and commissions from everything just mentioned!!
(5) This played a huge part in the U.S. and global financial collapse, and hundreds of millions of lives are being destroyed because of this.

No one is being prosecuted !!

For the full evidence please view :

And in addition to those financial crimes (that are almost never prosecuted) many insurance companies are ignoring life threatening medical conditions when patients file claims in five types of insurance and they are also rigging huge bids to increase sales of those policies while giving Obama and the Republican leaders contributions as seen at :

This has all been filed under oath with penalty of perjury with Republican Congressional leaders Blackburn, Issa and Grassley and they have done nothing even though many citizens have requested action (including well known regional community and business leaders .

Barry Schmittou

Nov. 9, 2012, 4:15 p.m.

One link did not post right, it is

Stephanie Palmer

Nov. 9, 2012, 5:11 p.m.

Gee, did anyone expect any of these crooks to actually go to prison?  How naive.

Hmmmm…so Mairone has already proved that she can get away with anything to include escaping unscathed from Congressional hearings….

Perhaps her placement in that particular position should suggest that there is some lucrative loophole that is going to cost either the homeowners or the taxpayers - or both - an incredible-to-the-point-of-monstrous bundle that nobody else has seen yet????

lolll…could be simpler than that, of course.  Could just be “Either you give me a well-paying, meaningful - not just a token - position, or I’ll rat.”

Coming from Countrywide, it could very well be that.  I don’t doubt that nest drew birds of a feather from other nests; people will brag, you know.

When the GOP references “job creators,” they refer to people such as Mairon.  Think of all the attorneys and regulators she is singlehandedly keeping employed.

We need Elizabeth Warren to get involved!  We need decisive action on bringing the big banks in line.  Execs need to do some prison time…fines are just the cost of doing business and will get passed to the consumer.

Seriously - when the outright thuggery committed by people like Mairone is called exactly what it is - instead of “misdeeds” only then will it be possible to slam those thieving hoodrats into prison where they belong - for life. People in this country are so awed by titles and money they make it possible for the real trash to get away with murder - but absolutely forever destroy the lives of those whose “crimes” are literally nothing but self-destruction - and hurt no one but themselves - and are actually motivated by poverty and a desire to survive in this backwards greed-obsessed country - then contrast such with vomit like Mairone whose greed and self-obsessed putrid morality cause the destruction and persecution of millions of people in the name of personal greed and narcissism. 

Only children and the young are capable of committing “misdeeds” - not grown azzed corrupt men and women in business suits with sociopathic personality disorder who should never be allowed to manage anything except digging ditches and pressing license plates.

Enough already of trying to “soften” the dirty dog crimes committed by people near the top of the foodchain just because they have degrees and titles - many have proven themselves lower than street trash.

Well put, Tutt.

Tutt, I think you speak for the whole country….Very wel said!!!

Our government keeps giving OUR money to the BIG banks who have proven to be nothing but a bunch of crooks.  This must STOP.  This should be turned over the new Consumer Finance Protection Agency for payment and enforcement.

There is a simple fix to this, the weakness is the Justice depart, gee, government, go figure. They have obviously broken the settlement terms and any Attorney worth his salt,( AG’s office ???) would bring in tandem criminal and civil actions, what jury wouldn’t literally “fry them” to big to fail and to big to be prosecuted, not as obvious as this is, this conspiracy caused the creation of MERS, to cloud the path but is yet another act in furtherance of a conspiracy, NO JUSTICE AND FRUSTRATION, ANOTHER BIG BUSINESS AND GOVERNMENT RUSE. ACTUALLY THIS LOOKS LIKE GOVERNMENT CONSPIRING WITH BIG BUSINESS TO DUMB THIS DOWN TO NO FAULT.

There is a simple fix to this, the weakness is the Justice depart, gee, government, go figure. They have obviously broken the settlement terms and any Attorney worth his salt,( AG’s office ???) would bring in tandem criminal and civil actions, what jury wouldn’t literally “fry them” to big to fail and to big to be prosecuted, not as obvious as this is, this conspiracy caused the creation of MERS, to cloud the path but is yet another act in furtherance of a conspiracy, No justice again from this administration and more frustration. Another big business and government ruse. Actually, this looks like government conspiring with big business to dumb this down to no fault at all.

They say low participation in the program, what forum is being used to notice these people and worse. What the mainstream media refuses to tell you, how many are uninformed living on the street and house to house of others to live from this crisis. I’m have read some of this, getting the word out to the eligible isn’t stated. It appears that the OCC has let this thing quickly get out of control.

Carol Davidek-Waller

Nov. 10, 2012, 11:42 p.m.

Paul Pelosi Jr….Nancy’s son was on the Board of Countrywide during it’s heyday.

re: Stephanie Palmer: Gee, did anyone expect any of these crooks to actually go to prison?  How naive.

Is it time for vigilante justice?

Y’know, I’d comment, but I think this is a case where the facts speak for themselves pretty loudly.

No, wait.  I’ll point out that, if it were any of us, “allegedly enabling fraud” would have us up on charges of conspiracy to commit fraud, and probably federal charges for (ab)using the mail to do it.

Wayne, I’m sure the bankers (and Washington) would love nothing more than to see some vigilante justice.  All you need is one bloodied banker (or politician) to give them the opportunity to hit back significantly harder.

John, I wouldn’t advocate the bloodied banker or politician scenario, but there should be a way that the common man can hold these bankers responsible and get some sort of justice. As you point out, if it would have been any of us, we would be held responsible.

I was a little perturbed when I commented earlier . . . but when I think of all the children - not to mention families struggline or headed by single moms - that were forced into foreclosure and put out of their homes because of this it makes me sooo angry and sad - what could it have possibly hurt the banks to help people especially after they were bailed out by Congress to the tune of hundreds of billions. And they mostly posted profits during the same time. The big banks appear to be back to normal but the people foreclosed (millions lost jobs due to the economic downturn) were scourged and just a little compassion for a couple years wouldn’t have hurt the system the way millions of foreclosures have destroyed lives, families and neighborhoods.

It would’ve been much much more democratic if our government told the truth about the mess and what caused it and why - and reset the economy by helping people instead of the banks that caused it. The economic collapse could’ve been prevented because it’s the same greed that caused the Great Depression - and this may be the last time the U.S. can bear the strain and chaos of unchecked greed.

@ Tutt: The government with both parties is largely responsible for this mess, for the recession, near depression. I have much better understanding on what happened during the 2008 financial meltdown. A book that goes a long way in explaining the government’s, the democrats and the GOP’s hands in this meltdown is called: “Griftopia: A Story of bankers, politicians and the most audacious power grab in American history.” It’s by Matt Taibbi. It isn’t just one political party, it’s both and it’s our financial institutions and their so called Ninja loans.

The finger should be pointed at people like former fed chairman Alan Greenspan as well.

That’s exactly right, Wayne.  Don’t ever forget that, in 2008, both Obama and McCain suspended their campaigns for the day, because they wanted to rush back to Washington and get their votes for the bank bailout (which was, unfortunately, in no danger of failing) recorded.  If that wasn’t an announcement that both major parties are intent on fleecing the people, I don’t know what is.

To your point, though, I’d go with small claims court, if you were directly wronged.  The bank isn’t going to show up to defend itself, which leads to a summary judgement in your favor.  Only a few hundred bucks, sure, but when they don’t pay (and they won’t), you can probably convince the local Sheriff’s office to shut down the local branch office for you to seize what’s yours.

(It’s a different situation, but the Patrick Rodgers/Wells Fargo case down in Philly was widely publicized on the web.)

Have that done in southern Manhattan (the corporate headquarters) a few times and seize a few hard drives, and you might drive the point home eventually.

I’ll grant, though, that a move like that probably isn’t for amateurs.

It’s worth pointing out, though, that this isn’t a new problem.  The reason that John Dillinger is so vilified in history (including murders attributed to him with no evidence) and the reason he was so popular with people on the street wasn’t that he was glamorous or interesting.  It was that, when he robbed a bank, he made a point to burn the mortgage certificates on his way through.

Without the mortgage certificate (and this is directly relevant, here), the bank has no evidence that it has a material interest in the property, meaning they have no standing to pursue payments.  And if the bank doesn’t have the power to demand payment, the name on the deed fully owns the house.

The difference is that lacking a mortgage certificate (because it was sold or lost) doesn’t stop banks from foreclosing anymore.

Margaret Noyes

Nov. 20, 2012, 8:38 p.m.

Take action. Sign all petitions re JP MORGAN CHASE foreclosures on  Amazing how social networking works.  Also cancel your chase accounts.  Vote with your feet.

James W. Peterson

Nov. 23, 2012, 2:05 p.m.

Claiming she knew something was going wrong and did not respond in a proper way assumes she is smart enough to understand all that is required to both understand the situation and how to respond to it in a proper way. The evidence suggests she is not.

So how did she get the job in the first place? Well… there are many ways to promote oneself. Some require self-esteem, other do not.

I am in Foreclosure! All because COUNTRYWIDE overbilled me through my escrow and then told me I was late on my payments! I have been cheated by COUNTRYWIDE and now BOFA. But finally, now I have them in a LIE. They DO NOT EVEN HAVE STANDING TO FORECLOSE! I just found my NOTE through FinancialScreenshots (Google). For $15.99 I just saved myself thousands in Lawyer fees. Now, watch out for me, I am taking BOFA down. I hope this works for you too. thanks

This article is part of an ongoing investigation:
Foreclosure Crisis

Foreclosure Crisis: Banks and Government Fail Homeowners

Banks and the government have fallen short in helping homeowners in danger of foreclosure.

The Story So Far

Systemic failures at the country’s banks and mortgage servicers have exacerbated the most severe foreclosure crisis since the Great Depression, and government efforts to limit the damage have fallen short. ProPublica created an unrivaled database of homeowners who have faced foreclosure, opened a Facebook page to encourage homeowners to share their stories, wrote profiles of some of them, and incorporated their experiences into our reporting. We also provided a comprehensive rundown of the numbers behind the crisis.

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