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.