Lost in the shuffle of the United States Court of Appeals for the Second Circuit’s decision to toss the $1.27 billion penalty against Bank of America in a fraud case over defective mortgages sold by Countrywide was the fact that the court also overturned the fraud charges and voided the $1 million penalty against Rebecca Mairone, who the New York Times once referred to as the “face of the housing crisis.”
Mairone, who now goes by her maiden name, Rebecca Steele, is a former executive at Countrywide and one of the few individuals whose actions during the housing crisis landed them in legal trouble – until earlier this week, that is.
According to the Appeals Court’s decision, during 2007 and 2008, Steele was the chief operating officer of the Full Spectrum Lending Division at Countrywide and was responsible for the Full Spectrum Lending Division’s reorganization and the implementation of Countrywide’s “High Speed Swim Lane” or “HSSL” loan origination process.
The “HSSL” program also became known as “Hustle,” and was characterized by the program’s speed in underwriting loans.
In 2013, a federal jury ruled that BofA and Countrywide were liable for defrauding Fannie Mae and Freddie Mac by selling toxic mortgage loans to the government-sponsored enterprises.
In 2014, a federal judge ruled that Bank of America was required to pay more than $1 billion in fines for the Hustle loan sales, despite the government seeking more than $2 billion. The judge also ruled that Steele was required to pay a fine of $1 million.
And earlier this week, the Court of Appeals ruled in Bank of America’s and Steele’s favor and threw out the fine against each. The court ruled that the government did not prove that Countrywide and Steele committed fraud when they sold toxic mortgages to Fannie and Freddie.
From the court’s ruling:
On appeal, Defendants argue that the evidence at trial shows at most an intentional breach of contract—i.e., that they sold mortgages that they knew were not of the quality promised in their contracts—and is insufficient as a matter of law to find fraud. We agree, concluding that the trial evidence fails to demonstrate the contemporaneous fraudulent intent necessary to prove a scheme to defraud through contractual promises. Accordingly, we reverse with instructions to enter judgment in favor of Defendants.
In the wake of the decision, Steele’s attorney told HousingWire that they are “thrilled” by the court’s decision.
“We are thrilled that Rebecca has been vindicated,” Steele’s attorney said in a statement to HousingWire. “She was unfairly scapegoated but justice has prevailed.”
As the Wall Street Journal noted earlier this week, the reversal of the sanctions against Steele means that the there are now only four bank employees who the government won a “contested case” against in the wake of the crisis.
The Wall Street Journal piece is accompanied by a large picture of Steele, who in many ways became the “face of the housing crisis,” a title bequeathed upon her in 2013 by the New York Times.
Some other previous media coverage of Steele’s fine and characterizations of Steele were less grandiose but still unseemly, a fact that did not go unnoticed by the National Association of Women in Real Estate Business, which this week released a lengthy statement/article about Steele’s exoneration.
“This is a victory for Rebecca Steele, and for all hardworking professionals who at one point or another find themselves in the crosshairs of situations for which they are not responsible but nevertheless blamed,” the un-authored NAWRB piece states. “But it isn’t all rose-colored, and in fact, it is necessary to examine the effects and meaning of the federal government’s erroneous charge against Rebecca Steele.”
The NAWRB piece goes on to discuss the “coverage” of Steele (pictured below) before, during and after the trial that led to her fine.
From the NAWRB:
In the coverage detailing the case against her, Steele was presented not only as a professional but also as a woman. Article(s) describing her hair color and style of dress reminded readers that the federal government wasn’t just charging a chief operational officer, they had found a woman at fault. This is the first issue. Would a man’s hair and fashion choices have been discussed if he had been in Steele’s position?
News outlets aimed not only to expose the decisions for which Steele was being indicted, they wanted audiences to consider and remember her gender. This could be to sell more newspapers and issues, stir conversations and turn heads, sure. But the subtext is troubling. “It was a woman’s fault.” “See, women can’t lead.” “We can’t trust women with important decisions.” These are all the type of reactions the writers writing about Steele prior to May 23, 2016 evoked, whether or not they would like to accept or admit it.
Although the NAWRB piece doesn’t address it directly, the article appears be referencing a 2014 article on TheStreet.com that called Steele a “blonde go-getter” in the headline, among others.
The NAWRB also calls out “the media” for its coverage of reversal of the Bank of America fine and the dearth of mentions of Steele.
“Even in her victory, Steele continues to be wronged. Most of the releases and articles about the ruling detail Bank of America but overlook her name,” the NAWRB said. “She is either absent or offhandedly mentioned. There was no shortage of the name Rebecca Steele when she was being accused; when she was, in the eyes of her accusers, on the wrong side of things. Now, when her name should be spoken of more than ever and associated with innocence, its mentions are few and far between.”
Now, Steele plans to move forward, according to the NAWRB, for which Steele serves as the chairwoman for NAWRB’s Diversity and Inclusion Leadership Council.
“Now, Steele can move past this case and rebuild her career. But this is easier said than done,” the NAWRB said. “The effects of this case on Rebecca Steele are extensive and may never truly be forgotten. We cannot allow ourselves to ignore this fact, and it is one that must be considered when cases of this nature are brought to the forefront. A person’s life is nothing to play with.”
