Am I the only one who sees some humor in this?
First the Feds push the banks to hand out "zero down" mortgages to people who really couldn't afford to make payments on a home.
Then the house of cards came tumbling down and they handed out money to prevent the banks from failing.
And now... FHFA is suing 17 banks (including our old favorite, Bank of America) and 132 individuals, alleging fraud. Chase is at the top of the list, with $33 billion in such loans.
The lawsuit, filed last Friday, alleges that these banks misrepresented the loans sold to the GSEs and in so doing, violated sections of the Securities Act of 1933, along with other violations.
If you look at the chart contained within this Mortgage News Daily report, you'd sure come to that conclusion. In a rundown of just 5 Bank of America transactions it looks as if they claimed that none of the loans involved had a LTV ratio of 100% - while an audit revealed that from 14.56% to 20.48% did indeed include loans with over a 100% LTV ratio.
Guess they thought no one would notice.
The suit also mentions that proper underwriting practices were not followed, Did they just now figure that out?
OK - it isn't funny, because the consequences were and are so serious. But it is a "Comedy of Errors."
The next question, of course, is "How will this lawsuit affect your buyers' ability to get new mortgage loans?" I guess we'll have to wait and see.
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