US is Suing Big Banks Over Mortgages


The NY times has recently reported that 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”. These lenders include Bank of America, JPMorgan Chase, Goldman Sachs and Deutsche Bank, among others.

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.

We are thrilled about this news. This proves that the predatory lender had wide implications then what everyone initially thought. The foreclosure crisis looming on US is unending, and the economy cannot be improved, until this gigantic crisis is controlled and remedied. This crisis has especially hit hard Nevada, and its economy. We virtually see no construction activities at this time. The latest job report is very dismal. The politicians are running from pillar to post, and nothing tangible is done to rectify the job situation. Only statements are delivered for their print effect.

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3 Comments

  1. I would like to talk to you about possible litagation against the banks regarding mortgage fraud. I have been a mortgage banker for 18 years and I have thousands of clients. I am looking for an attorney for special appearances and for full representation.

    Please call me at (702) 787-2245

    Bill Cruz

    • Bill:
      In all honesty, when it comes to mass filing of lawsuit, I just shy away. First, it is a very small office as I am the only attorney and samll paralegal help. Secondly, in the past I had seen a bad collaboration between attorney and non-attorney firms and “thousand of clients”. Most of these places, including Nevada had filed lawsuit against big banks (like the recent one from State Attorney General of Nevada) which your clients can easily join without any upfront fee. Rather, I should encourage them to join. I also noticed bank settle these cases with Attorney Generals quickly compared to a lawsuit in the local courts. At the very beginning of this crisis, thousand of clients filed (almost on the same templates) in the State of Nevada. I am forgetting the name of this guy (probably Fern) who robbed these clients blindly, their suits were thrown away by judges, and he is languishing behind bars at this time. Also, most of these clients’ had already exhausted their statutory time period of both TILA and RESPA’s violations assuming they bought these homes during 2005 and later. Furthermore, these laws are applicable mostly in primary homes, and not investor homes. Based on these grounds, I hesitate to file class action lawsuit. I am solicited everyday to join by outside law firms especially from California and Florida, and my answer (regrettably) is the same. I do very small amount of foreclosure defense work based on choiced cases for which I got very good result for my clients. Preferrably, I like to stay that way i.e small and qualitative. Truthfully, out of 10 clients I meet, only one has some merits, and I do not like to just file cases based on no merit as this would trigger sanctions against me. Most of them like to use my services to stay few more months free in their home. They had not paid their lenders for 36-48 months and now like to use my services for living free another 12 months or so.

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