Judge Rakoff determined that the fraud affected every mortgage because the buyers — the government-controlled finance giants Fannie Mae and Freddie Mac, in this case — would never have purchased the mortgages in the first place had they been told about Countrywide’s shoddy loan approval practices. He compared the transactions to buying a diseased cow, noting that even if there was some residual value, the fraud occurred in a sale that never should have taken place.
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