Friday, September 02, 2011

Federal government to sue banks for bad mortgage loans during bubble

The bad news for banks just keeps coming:
The federal agency that oversees the mortgage giants Fannie Mae and Freddie Mac is set to file suits against more than a dozen big banks, accusing them of misrepresenting the quality of mortgage securities they assembled and sold at the height of the housing bubble, and seeking billions of dollars in compensation.

The Federal Housing Finance Agency suits, which are expected to be filed in the coming days in federal court, are aimed at Bank of America, JPMorgan Chase, Goldman Sachs and Deutsche Bank, among others, according to three individuals briefed on the matter.

The suits stem from subpoenas the finance agency issued to banks a year ago. If the case is not filed Friday, they said, it will come Tuesday, shortly before a deadline expires for the housing agency to file claims.

The suits will argue the banks, which assembled the mortgages and marketed them as securities to investors, failed to perform the due diligence required under securities law and missed evidence that borrowers’ incomes were inflated or falsified. When many borrowers were unable to pay their mortgages, the securities backed by the mortgages quickly lost value.

Fannie and Freddie lost more than $30 billion, in part as a result of the deals, losses that were borne mostly by taxpayers.


  1. what and how is this going to help the home owner whos behind and upside down in their mortgage remain in their home, lower their payment and property taxes. 

  2. I'm guessing when they win the suit, the tax payers will ante up the money so the banks can pay it!

  3. well I cant say anything what will be happen..

  4. Yup! You are going to give us your money again!!!

  5. Take a wild guess Anthony!!

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