Federal Government Sues Bank of America
The United States has filed suit against B of A, claiming that the bank sold thousands of bad mortgage loans to Fannie Mae and Freddie Mac, resulting in more than $1 BILLION (yep, that’s a “B”!) in losses at Fannie and Freddie.
B of A bought Countrywide in 2008 and the bad loans in question were originated by Countrywide, then sold to Fannie and Freddie.
The complaint claims that Countrywide Home Loans’ “Hustle” scheme fast-tracked loan processing while avoiding the use of established underwriting guidelines.
The loans in question allegedly had defect rates that were as much as nine times the industry average.
This is yet another reason why Fannie and Freddie had to be taken over by the federal government.
Unfortunately, we taxpayers are on the hook for their losses.
Source: NBCNews.com article
October 24th, 2012 Posted in Inside Real Estate
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