Bank of America Corp.'s Countrywide unit fraudulent sold thousands of loans known to be defective to Fannie Mae and Freddie Mac, according to Assistant U.S. Attorney Jaimie Nawaday in closing arguments in a lawsuit against the lender.

The case is the first to go to trial brought by the U.S. against a bank over defective mortgages. The case originated as a whistle-blower action against the bank brought by former Countrywide Financial executive Edward O'Donnell. Countrywide took part in the fraud to boost profits, making at least $165 million, a lawyer for the government said at the start of the trial in September.

Government-sponsored entities such as Fannie Mae and Freddie Mac purchased thousands of defective loans on single-family homes from Bank of America and Countrywide from 2007 to 2009, the U.S. alleges. Bank of America acquired Countrywide in 2008.

The U.S. alleges that to hold revenue in a bad market for subprime mortgages, Countrywide initiated a loan program called High Speed Swim Lane, or HSSL, in August 2007. O'Donnell testified during the trial that he warned other Countrywide executives about the failure rate of HSSL loans.

Nawaday said the HSSL program was all about speed and volume, and not quality.

"This is a case about greed and lies," Assistant U.S. Atty. Jaimie Nawaday told the jury Tuesday in Manhattan federal court. Countrywide was saying internally that the loans' quality was "in the ditch" while at the same time selling them to Fannie Mae and Freddie Mac "for a quick profit," she said.

Brendan Sullivan, a lawyer for Countrywide, told jurors that the U.S. did not prove Fannie Mae or Freddie Mac had been defrauded. Sullivan said messages sent by O'Donnell show he praised the efforts of colleagues on HSSL and endorsed the program, which ran from 2007 to 2008.

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