Skip to comments.U.S. Is Set to Sue a Dozen Big Banks Over Mortgages
Posted on 09/01/2011 7:50:27 PM PDT by Free ThinkerNY
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.
In July, the agency filed suit against UBS, another major mortgage securitizer, seeking to recover at least $900 million, and the individuals with knowledge of the case said the new litigation would be similar in scope.
(Excerpt) Read more at nytimes.com ...
First the government enables all of the funny business in the housing sector, then it sues it’s co-conspirators. Is there no honor among thieves?
And how many mortgage brokers who had a significant pattern of fraudulent loans have been charged with crimes?
And how many real estate appraisers who fraudulently overvalued homes and real estate for mortgages were charged with crimes?
Now we'll blame this on the banks that made the loans?
The banks need to counter sue the government, as well as Freddie’s Fannie, for forcing them to approve loans and mortgages for Obama-supporting, deadbeat lowlifes.
Freaking political side show. If we sue banks can we sue congress in general, Barney Frank in particular? Can we sue Fanny/Freddie execs?
Hey government, how about prosecuting the guys who distributed guns to the Mexican drug enterprise. Who said that would work? How come you didn’t try it on a small scale first, like 20 guns; to see if it was effective? Then scale it to 100 etc. No, it had to be 1,500 freaking guns from the get-go. Who do we sue for that?
I am buying a new house now and even with a FICO over 800 and enough money to buy the place for cash, I am fighting with multiple government agencies and new requirements, many or most stupid (I went with a Mortgage because the interest rates are 3.5% APR which is damn near free).
Now the people who want to buy a home and who are legitimately qualified will have to go through a Mortgage version of Sarbaines-Oxley. A lot of pro-forma and bureaucratic hoops, none of which will stop the disaster that barney franks and the rest of the left created in the housing market.
I am disgusted with all these lying thieves in Washington.
Most politicians care only about their own jobs with the safe retirement fund and the gold-plated medical insurance. They want to cut social security and keep an ever enhanced welfare system so they can get re-elected.
They’re no different than the common thieves.
I have a better idea. The three horsemen (Raines, Gorelick, and Johnson) should be tried for theft of taxpayer funds with deliberate misstatement of risks to provide their large bonuses. These three Democrat grifters join the large list of Democrat grifters who have made incredible sums at taxpayer expense.
This suit is ridiculous. Fannie and Freddie were deeply involved in the mortgage meltdown. They were instigators and enablers, not victims. Fannie and Freddie were supported by many Democrat power players including Andrew Cuomo, Barney Frank, Chris Dodd, and many others. They should all be put on trial for crimes against taxpayers.
Is there no honor among thieves? <<<
Nope!...not a bit!...but its an excellent way to bring those “too big to fail” banks down to size...
Screw the fines, I want to see some of the high officers pulling serious jail time.
If your too big to fail, your too big to go to jail.
Yup!...let the banks sue the mortgage brokers and real estate brokers THEY paid and hired....
Do u really think the banks would have made those loans without 1st knowing they could get them off the books via FANNY and FREDDIE??
Great plan Obama. This oughta really help the market recover!
Shocking Video Unearthed Democrats in their own words Covering up the Fannie Mae, Freddie Mac Scam
I think this is a political mistake. But discovery should be fun for the banks’ lawyers.
I feel its like two whores fighting over a $100 bill on the ground.
Well, those banks can sue the federal government in return because it was the federal government that DEMANDED those bad loans to minorities. Then again, that could be the ploy all along: Fed acts tough, banks sue, get loads of free cash, deposit same into polidiots “campaign” accounts.
It’s all part of Obama’s plan to nationalize the banks.
This should be a very interesting defense. Government, “why did you make fraudulent loans?”. Banks, “because the Government made us do it”.
I wonder if this is some sort of ploy to crater the banks and rake in all their cash into the govt coffers. And you watch. Some FReepers will be along to applaud it because they are too goofy to realize that destroying the banking system is not in the best interest of the country.
That seems the most likely thing.
Agreed - thanks for injecting some sense into the discussion.
This is a shakedown. Legal extortion. It will be settled out of court with much fanfare during the middle of the campaign in 2012. Banks will agree to pay billions to the government and provide more favorable loans to the poor. The press will praise Obama. No way these banks will submit to a jury trial in front of 12 government selected citizens.
This is with a 20% down payment?
>>his is with a 20% down payment?<<
Yep. Cash on the barrelhead, no secondary loans from anyone or anything.
This should have been the easiest closing in the history of the Home Loan industry.
It is insane — all looks and no teeth.
Yep, Feds sue the banks for following a federal mandate.
Banks made loans because they were making money doing so. If they didn't want to, they'd have dragged their feet like they've done with mortgage loan modifications.
Consider that at the end, before the bubble burst, the finance industry didn't even need actual loans to make the more exotic derivatives it was selling (Synthetic CDOs).
The unfortunate lesson of the financial crisis for anyone who cares enough to learn it is that industry is incapable of regulating itself - rational self interest still exists, but it's the rational self interest of the folks who get paid for short term gains which is served, rather than the interests of society or the industry as a whole.
The banking system needs no help in cratering themselves they are doing a bang-up job of it all by themselves.
The ‘banksters’ need no help in cratering the system they are doing just fine on their own.
Fanny&Freddy: "You banks ripped us off by selling us bad loans!"
Another Obama/Holder coverup coming. Protecting Franklin Raines, Barney Frank, Chris Dodd and the other fools who corrupted the Community Reinvestment Act (CRA) that caused all these problems in the housing industry.
DOJ is also going after medium-small banks to force them to provide bad loans a la the CRA to people who cannot afford them. IT’S BACKKKKK! If the banks don’t cave in and take the losses, DOJ is going to sue them (IN AN HONEST GOVT, THIS WOULD BE CALLED EXTORTION).
Lot’s of shit is going to hit the fan, and this will definitely be a great issue to go after Obie and his marxist minions, as well as the corrupt Dept. of Justice. Holder has continued to load it, esp. the Housing Section, with veteran leftist and liberals.
The enemy is within the gates and getting paid by you.
Oh joy, when the housing market is at its weakest, that’s when the gummit sees fit to make the buying process into a pain. Even you being “too rich” shouldn’t be a reason for this, since you might be a landlord wanting to buy units that would otherwise sit idle.
oh that’s rich.. The Obama’s ilk forced these banks to do subprime loans and now they are sueing.
First the goobermint FORCES these Banks to MAKE the loans to people who obviously CAN'T PAY. Then when the Banks are on the hook and need a Bail Out because of what the 'G' FORCED THEM to do - or the whole economy goes down the tubes -- they're sued by the same Goobermint.
Honestly, this is like right from the book.
Yossarian: "That's some catch that Catch-22"We're DOOMED.
Doc Daneeka: "Yep, it's the best there is."
Fast forward to present, they've both got credit scores in the 800's, no debt beyond their mortgage, and at least 50% equity in their home (since they'd bought a real fixer upper and have put a ton of work into it). They say refinancing now for a lower rate is more difficult than it was getting the initial mortgage and they are now much more qualified.
Coming down the pike: the government suing colleges for not turning sub-prime students into brainiacs that can afford their government guaranteed loans.
“Banks made loans because they were making money doing so. If they didn’t want to, they’d have dragged their feet like they’ve done with mortgage loan modifications.”
Maybe, but that doesn’t account for the demand by the feds. The banks did protest but the fed refused to accept any mortgage portfolios that did not contain enough minority sub-prime loans. Once that model was in place the banks made sub-prime loans to everyone, not just minorities. The fed also put into place various laws that required sub-prime loans, such as the Community Reinvestment Act.
ANGELO MOZILO Then-chairman and chief executive of Countrywide Financial. The biggest American sub-prime mortgage lender, was a step away from bankruptcy when Bank of America paid billions to settle investigations by various attorney generals for Countrywide's mis-selling of risky loans to thousands who could not afford them.
Mozilo ran a "VIP programme" that provided loans on favourable terms to influential figures including Christopher Dodd, chairman of the Senate banking committee, the heads of the federal-backed mortgage lenders Fannie Mae and Freddie Mac (that taxpayers were forced to bailout) , and former assistant secretary of state Richard Holbrooke (now in Obama's admin).
SEN CHRIS DODD (D-Conn) has faced an ethics inquiry over allegations that he received preferential treatment on two mortgages in 2003 from Countrywide Financial. And then came the dramatic financial meltdown last month, placing Dodd at the center of a controversial $700 billion financial rescue plan.
As a member and later chairman of the Senate Banking Committee, Sen. Dodd shoulders a good deal of the blame for the collapse of the national housing market, the subprime-mortgage-market meltdown and the convulsions on Wall Street which is costing taxpayers billions.
ANALYSIS We are witnessing the emergence of a new government dictatorship. History tells us that the rampant corruption, fed by cronyism, are the nuts and bolts of dictatorships. Dictatorships are almost always governed by groups of friends and associates who appoint each other to government positions and use governmental power and authority to protect their friends from accountability.
CASE IN POINT: When the Dodd-Frank financial overhaul bill was passed last summer, its supporters promised greater scrutiny of big money managers, such as hedge funds and private-equity firms, that have long been allowed to fly under regulators' radar........... In a strange twist, the new rules aimed at cleaning up Wall Street may make it easier for some investment managers to commit fraud.
No surprise here. Dodd was bought and paid for by financial interests. And when Dodd dropped out of politics to become Hollywood's point man, Barney Frank sucked up to the same interests.
Reams of legislation Dodd has written or advocated affecting the housing, lending, insurance and securities industries have drained hundreds of billions out of the economy, ballooned the federal debt, cost tens of thousands of people their jobs and driven hundreds of thousands of homeowners into foreclosure, bankruptcy or both.
For his efforts, Sen. Dodd was rewarded in the 2008 election cycle alone with $7.65 million in campaign contributions (he took in $11.7 million in all) from the securities, insurance, real-estate and commercial-banking industries. With $165,400, Sen. Dodd also tops the list of members of Congress who took campaign cash from Fannie Mae and Freddie Mac since 1989. Sen. Barack Obama, the self-styled agent of change, is second at $126,000....
SEN DODD'S CAMPAIGN CONTRIBUTORS
SAC Capital Partners, $282,000;
United Technologies, $263,400;
Bear Stearns, $205,600;
St. Paul Travelers, $205,400;
Royal Bank of Scotland, $203,750;
Goldman Sachs, $175,600;
Morgan Stanley, $155,000;
Credit Suisse, $154,550;
Merrill Lynch, $134,950;
The Hartford, $94,350;
Bank of America, $91,300;
JPMorgan Chase, $129,150;
Hartford Finance Services, $101,500
Lehman Brothers, $128,400;
General Electric, $108,250;
Deloitte Touche, $108,000
Saying it twice doesn’t make it any more true.
Yup, there were a whole lot of things the govt did that most people know nothing about. Banks could not expand if they weren’t doing the right kind of loans etc. But people don’t want to know that stuff. It’s more fun to hate people who have more money than you do. Liberals count on that. It’s why class warfare works so well.
>> Even you being too rich shouldnt be a reason for this, since you might be a landlord wanting to buy units that would otherwise sit idle.<<
Oh no no no no no.
You see, buying a Fannie Mae foreclosure, as well as getting good interest rates, requires “owner occupation.” I had to go though all kinds of hoops to “prove” it is OK to work anywhere in the US. Fannie Mae has a $10,000 “liquidated damages” clause if you don’t occupy the unit for at least a year (not that they have any way of finding out).
Better to let the house lie fallow than to let an eeeevil capitalist get in there to create a rental unit!
What a wise gummit /not
I don't follow what you mean by 'refused to accept'. Could you elaborate?
Banks sell their mortgage portfolios to institutions primarily Fannie and Feddie. Neither were allowed to accept portfolios that didn’t have the required makeup of sub-prime mortgages. Also, banks could borrow money from the fed for making mortgage loans. That money was restricted if the bank did not hold or loan to sub-prime. Something tells me you already know that.