High-Speed Swim Lane (HSSL or “hustle”)

Countrywide Financial was once a large mortgage lender; Countrywide failed during the financial crisis of 2008, when it was sold to Bank of America. The U.S. Department of Justice sued Bank of America/Countrywide in 2012 for what was called the “High-Speed Swim Lane” (HSSL, pronounced and nicknamed “hustle”). Bank of America/Countrywide was alleged to have dropped its normal loan requirements so that loans could “move forward, never backward.” The Department of Justice alleged that the “hustle” ultimately cost the government sponsored entities Fannie Mae and Freddie Mac over one billion dollars.
 
“The ‘Hustle’ (or ‘HSSL,’ for ‘High-Speed Swim Lane’ is certainly a new entry in the mortgage vernacular” was written on Twitter on October 24, 2012.
 
   
Wikipedia: Bank of America Home Loans
Bank of America Home Loans is the mortgage unit of Bank of America. Bank of America Home Loans is composed of:
 
. Mortgage Banking, which originates, purchases, securitizes, and services mortgages. In 2008, Bank of America purchased the failing Countrywide Financial for $4.1 billion. In 2006 Countrywide financed 20% of all mortgages in the United States, at a value of about 3.5% of United States GDP, a proportion greater than any other single mortgage lender.
 
United States Department of Justice
THE UNITED STATES ATTORNEY’S OFFICE
SOUTHERN DISTRICT OF NEW YORK
Manhattan U.S. Attorney Sues Bank Of America For Over $1 Billion For Multi-Year Mortgage Fraud Against Government Sponsored Entities Fannie Mae And Freddie Mac
FOR IMMEDIATE RELEASE Wednesday, October 24, 2012
After Collapse of Subprime Lending Market in 2007, Countrywide Started Alleged Fraudulent Mortgage Origination Program Called the “Hustle” Designed to Sell Defective Loans to Fannie Mae and Freddie Mac
Bank of America Continued the “Hustle” After Acquiring Countrywide in 2008
(...)
COUNTRYWIDE initiated the Hustle (or “HSSL,” for “High-Speed Swim Lane”) in 2007 through its Full Spectrum Lending Division, just as loan default rates were increasing throughout the country and the GSEs were tightening their loan purchasing requirements to reduce risk. According to internal COUNTRYWIDE documents, the goals of the Hustle were high speed and high volume, where loans “move forward, never backward” in the origination process. To accomplish these goals, the Hustle removed necessary quality control “toll gates” that could slow down the origination process. For example, the Hustle eliminated underwriters from loan production, even for many high-risk loans, such as stated income loans. Instead, the Hustle relied almost exclusively on unqualified and inexperienced clerks, called loan processors. Although loan processors had not been previously considered competent or knowledgeable enough to be permitted even to answer borrower questions, they were now required to perform critical underwriting duties. If a loan processor entered data from a loan file into an automated underwriting system called CLUES and received a rating that the loan had an acceptable risk of default (or “Accept” rating), no underwriter would ever see the loan. The Hustle also did away with compliance specialists, whose job it was to ensure that any loans that were approved with conditions had the conditions satisfied before closing. Although loan processors were at the time entrusted with much more responsibility, they were given much less guidance. For example, mandatory checklists for performing important underwriting tasks (such as evaluating an appraisal or assessing the reasonableness of stated income) were eliminated. Loan processors were also financially incentivized to put volume ahead of quality, as Full Spectrum Lending changed its compensation plan to provide bonuses based solely on loan volume. Reductions to compensation for poor loan quality were discontinued.
 
Twitter
Alan Zibel
‏@AlanZibel
The “Hustle (or “HSSL,” for “High-Speed Swim Lane” is certainly a new entry in the mortgage vernacular
12:01 PM - 24 Oct 12
 
New York (NY) Times—Dealbook
INVESTMENT BANKING OCTOBER 23, 2013, 6:17 PM
Jury Finds Bank of America Liable in Mortgage Case
BY LANDON THOMAS JR.
Updated, 9:20 p.m. | Bank of America, one of the nation’s largest banks, was found liable on Wednesday of having sold defective mortgages, a jury decision that will be seen as a victory for the government in its aggressive effort to hold banks accountable for their role in the housing crisis.
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Federal lawyers claimed that Ms. Mairone, who now works at JPMorgan Chase, led a program nicknamed the “hustle,” derived from the initialism HSSL, or the “high-speed swim lane.” The program linked bonuses to how fast bankers could originate loans and as a result, the credit quality of the borrower was given short shrift, the government contended. When the loans were sold to mortgage giants like Fannie Mae and Freddie Mac, they failed, generating more than $1 billion in losses.
   
New York (NY) Times
U.S. Seeks $864 Million From Bank Over Poor Loans
By REUTERS
Published: November 9, 2013
The United States government has asked that Bank of America pay $863.6 million in damages after a federal jury found it liable for fraud over defective mortgages sold by its Countrywide Financial unit.
(...)
The case centered on a mortgage lending process at Countrywide, which Bank of America bought in July 2008, known as the “high-speed swim lane,” or HSSL, nicknamed the “hustle.”
 
The government said the program emphasized and rewarded employees for the quantity rather than the quality of loans produced, and it eliminated checkpoints intended to ensure that loans were sound.
 
Reuters
BofA says it should owe zero penalty in ‘Hustle’ fraud case
Thu Nov 21, 2013 2:22pm GMT
By Jonathan Stempel
NEW YORK, Nov 21 (Reuters) - Bank of America Corp urged a U.S. federal judge to impose no penalty even after a jury found it liable for fraud over the sale of defective mortgages by its Countrywide Financial unit.
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Investigators said a Countrywide process known as “Hustle,” as well as “High Speed Swim Lane” and “HSSL,” had rewarded employees for the quantity of loans produced and eliminated checkpoints meant to ensure that the mortgages were sound.
 
But Bank of America said the government could not show that Fannie Mae’s and Freddie Mac’s losses stemmed from alleged Countrywide misrepresentations “as opposed to other factors such as the worldwide mortgage crisis.”