Score one for the government in the fight to rectify the 2008 mortgage crisis. On Oct. 23, a Manhattan federal jury found Bank of America Corp.’s Countrywide unit liable for selling thousands of defective loans to mortgage-finance firms Fannie Mae and Freddie Mac, thus setting off the financial crisis.

The case, which was the first brought by the government to actually go to trial concerning the mortgage crisis, will see civil penalties set at a later date. Assistant U.S. Attorney Pierre Armand asked the court to fine Countrywide $848 million, the gross losses between Fannie Mae and Freddie Mac as a result of the fraud. Bank of America has already been hit hard from settlements concerning the mortgage crisis, with Federal Housing Finance Agency rumored to be seeking $6 billion from the bank to cover damages.

The court also found former Countrywide executive Rebecca Mairone liable for having a direct hand in defrauding the government. Mairone was the only individual defendant named in the government’s suit, and according to trial testimony, the government claimed Mairone ignored potential safety concerns related to Countrywide’s automated loan program named “Hustle”. Mairone, meanwhile, claimed that Hustle would increase overall loan quality by limiting the people processing loans, making the loan process more efficient.

In actuality, the Hustle program systematically removed quality controls and, through the heavy use of automated loans, resulted in a higher default rate. The government alleged that Countrywide made $165 million from the Hustle program, while Fannie Mae and Freddie Mac suffered net losses of $131 million.

According to Bloomberg, the U.S. attorney’s office feels that Countrywide treated quality control “as a joke.” Manhattan U.S. Attorney Preet Bharara said in a statement, “In a rush to feed at the trough of easy mortgage money on the eve of the financial crisis, Bank of America purchased Countrywide, thinking it had gobbled up a cash cow. That profit, however, was built on fraud, as the jury unanimously found.”

A spokesman for Bank of America said the company is exploring its options to appeal. Mairone’s lawyers plan to appeal as well, with lawyer Marc Mukasey saying after court, “We are not going to stop fighting for Rebecca. She’s a woman of integrity, ethics and honesty. She never engaged in any fraud because there was no fraud. We’re going to fight on.”

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