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Mortgage Companies in Raleigh scratch heads over banks lawsuit

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Mortgage Companies in Raleigh scratch heads over banks lawsuit. Why now? What has changed between the big bank collapse of 2008 and now? Here is an interesting article from NPR website:

In a sweeping move, the government on Friday sued 17 financial firms, including the largest U.S. banks, for selling Fannie Mae and Freddie Mac billions of dollars worth of mortgage-backed securities that turned toxic when the housing market collapsed.

Among the 17 targeted by the lawsuits were Bank of America Corp., Citigroup Inc., JP Morgan Chase & Co., Goldman Sachs.

The lawsuits were filed Friday by the Federal Housing Finance Agency which oversees Fannie and Freddie, the two agencies that buy mortgages loans and mortgage securities issued by the lenders.

The total price tag for the securities bought by Fannie and Freddie affected by the lawsuits: $196 billion.

The government didn’t provide a dollar amount of how much it seeks in damages. It said that it wants to have the purchases of the securities canceled, be compensated for lost principal and interest payments as well as attorney fees and costs. The lawsuits allege the financial firms broke federal and state laws with the sales.

Home mortgage-backed securities were risky investments that collapsed after the real-estate bust and helped fuel the financial crisis in late 2008.

In the lawsuits that were filed in federal or state court in New York and the federal court in Connecticut, the government said the securities were sold with registration statements and prospectuses that “contained materially false or misleading statements and omissions.”

The Federal agency said the banks and mortgage lenders also falsely represented that the mortgage loans in the securities complied with underwriting guidelines and standards. They also included representations “that significantly overstated the ability of the borrower to repay their mortgage loans.”

The 17 institutions are Ally Financial Inc., formerly known GMAC LLC, Bank of America Corp., Barclays Bank PLC, Citigroup Inc., Countrywide Financial Corp., Credit Suisse Holdings Inc., Deutsche Bank AG, First Horizon National Corp., General Electric Co., Goldman Sachs & Co., HSBC North America Holdings Inc., JPMorgan Chase & Co., Merrill Lynch & Co. and its unit First Franklin Financial Corp., Morgan Stanley, Nomura Holding America Inc., The Royal Bank of Scotland Group PLC, and Societe Generale.

Mortgage Companies in Raleigh wonder how and if this latest development will affect the mortgage environment as well as the recover of the housing market. Opinions on the matter are highly divided; is it an attempt to score political points on part of the FHA commissioner? Does he have his eye on a new Washington appointment?

One issue still remains unanswered: why, in the face of blatant wrongdoing, perhaps a conspiracy to defraud investors and a huge market collapse, there are no heads rolling? We hear about “settlements”, “fines”, layer upon a layer of overreaching legislation and restrictions in the mortgage arena. What we don’t hear about is a good, old criminal prosecution of those involved in creating the mess. As of current, small potatoes like a few-person mortgage shops are subjected to audits, fines, examinations and licensing, while the big fish (bank COEs, Managers, fund managers) smile all the way to the bank.

Mortgage Companies in Raleigh scratch heads over banks lawsuit and wonder why now….

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Edyta Rhodes has written 25 articles on Service 1st Mortgage

I am an experienced mortgage broker, Raleigh-based with access to top national lenders. I have over 10 years experience, so I know how to design your mortage loan to fit your overall financial picture. I guarantee to find the best mortgage rate for you. You can find out more about me on Google+ Or you can email me at erhodes@nc.rr.com

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