Posted by Jason Wheeler | Fully Follow Me | Subscribe
It looks like the Federal Housing Finance Agency (FHFA) will be suing banks like Bank of America, Barclays, JP Morgan Chase and many others. The FHFA says many mortgage loans given in the SF Bay Area and through out the United States have been Fraudulent and these banks failed to properly underwrite these loans. Seems like two big behemoth organizations meaning the US Government and the Biggest Banks will be going head to head. It should be interesting to see how this all continues to play out wouldn’t you think?
If you ask me it seems wild that the same people (the US Government) forked out trillions of dollars to "Bail Out" these big banks and now they are suing them seems absurd. So why is the US Government suing these large banks anyway?
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A bruising legal fight pitting the country’s most powerful banks against the full force of the United States government began Friday, as federal regulators filed suits against 17 financial institutions that sold the mortgage giants Fannie Mae and Freddie Mac nearly $200 billion in mortgage-backed securities that later soured.
The suits are the latest legal salvo fired at the banks accusing them of misdeeds during the housing boom. Investors fled financial shares Friday amid growing concern that the litigation could last for years and undermine earnings and balance sheets in the process.
News reports say that the Federal Housing Finance Agency (FHFA) will sue 17 major banks in order to recover some of the losses that Fannie Mae and Freddie Mac sustained on mortgage-backed securities the banks issued.
The suits will seek to make the banks repay a share of about $30 billion in losses from securities that Fannie Mae and Freddie Mac bought before they essentially failed and the FHFA took them into conservatorship in September 2008.
Since any recovered money would reduce the over $150 billion the taxpayers have already spent on bailing out the two housing giants, this should be good news. However, the FHFA should not start counting the money it plans to recover quite yet. The suits are being filed now because the statute of limitations expires next week, and the burden of proof that the FHFA will have to meet will be high.
The FHFA is expected to charge that the 12 or so banks should have known that the mortgages that had been packaged into the securities that Fannie Mae and Freddie Mac bought were riskier than advertised. It claims that the banks failed to adequately check the quality of the mortgages before either selling them to packagers who combined mortgages into mortgage-backed securities or packaging them into securities themselves.
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Do you think it makes any sense for the Federal Government to spend trillions of tax payer dollars to again "bail out" these big banking institutions and then turn around and sue them? Sounds pretty fishy to me. It looks like the federal government and a whole lot of lawyers have a whole lot to gain financially should they be found the winner in any of this. What a bunch of crooks!!
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Finally!!! While they are at it, they need to look into the practices of these so called debt collection agencies called “loan servicers”, ie., Litton Loan Servicing, LP, OCWEN Loan Servicing, LLC, etc., that thesebanks use to collect on their mortgage investments, too.