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housing crisis 2008

  • Featured Story

    Bank of America (NYSE: BAC) Takes Huge Step in Fixing Its Mortgage Mess

    By Diane Alter, Contributing Writer, Money Morning - January 7, 2013

    To continue reading, please click here...

Article Index

  • Bank of America (NYSE: BAC) Takes Huge Step in Fixing Its Mortgage Mess
  • Here's Another Genius Mortgage Idea From Washington That Is Going to Cost You
  • The Real Crooks Are The Ones Who Perpetrated This Scam - Not The Shareholders

Bank of America (NYSE: BAC) Takes Huge Step in Fixing Its Mortgage Mess

By Diane Alter, Contributing Writer, Money Morning - January 7, 2013

About five years after the housing market crumbled, Bank of America Corp. (NYSE: BAC) has taken a major step toward resolving federal allegations it had improperly handled mortgages.

The Charlotte, N.C.-based bank announced today (Monday) it had reached a $10.4 billion settlement with federal mortgage issuer Fannie Mae, resolving all of Bank of America's disputes with Fannie.

BofA, which had been one of 14 banks negotiating with federal prosecutors over foreclosure abuses, settled its battle with housing finance giant Freddie Mac in 2011.

Under the latest settlement, Bank of America will pay $3.65 billion to settle claims related to the sale and delivery of certain residential mortgage loans. Plus, the bank will repurchase at a discounted price $6.75 billion worth of residential mortgage loans it sold to Fannie Mae.

BofA also said it has agreed to sell the servicing rights on some 2 million expensive residential loans, worth about $306 billion, that are chipping away at the value of the banking giant's stressed portfolio.

In a statement, Bank of America CEO Brian Moynihan said, "Together, these agreements are a significant step in resolving our remaining legacy mortgage issues, further streamlining and simplifying the company and reducing expenses over time."

To continue reading, please click here...

Here's Another Genius Mortgage Idea From Washington That Is Going to Cost You

By Shah Gilani, Chief Investment Strategist, Money Morning • @ShahGilani_TW - December 31, 2012

Now here's another good idea from the geniuses that ruin, I mean run, our country.

The Obamarama administration really wants to help homeowners whose homes aren't worth what they borrowed to buy them. In other words, they are "underwater."

A lot of the loans to homeowners that are underwater are owned outright or, at a minimum, insured (more often both) by Fannie Mae and Freddie Mac, the government-sponsored (which means taxpayer saddled) enterprises that the government had to take over when in 2008 they lost on their trillion-dollar bets that home prices would go up forever. Geniuses!

In fact, these geniuses own or insure close to half of all home loans in the United States. Obviously, they like to bet big. But they didn't bet alone. They had betting partners.

The casino was the whole country and the whole system.

The mortgage originators, prime and subprime lenders, banks - everyone was handing out loans because, get this, they wouldn't be responsible for the loans they were making. Fannie and Freddie were buying them all up while the guilty parties would make money as Fannie and Freddie pipelined more products to - guess what - make more loans!

In case you forgot, that's where all the money came from in the whirling dervish derby that fed the mortgage bubble and aided and abetted Alan Greenspan's how-low-can-you-go interest rate policies. I guess we can call him the Big Pit Boss. But I digress...

So, if Fannie and Freddie own your loan and you're underwater, they have been cattle-prodded by the geniuses above them (yep, government geniuses) to let you refinance at a lower rate (lower than the crushing, sucker's rate that ballooned on you).

Because, as an investor (that's what home buying really is - an investment, not a right) you made a go-for-broke bet at the table and forgot your basic math. Math that says, "One, plus the none that I have, equals three, so this is a good bet I can double down on and retire."

What will these geniuses think of next?

To continue reading, please click here...

The Real Crooks Are The Ones Who Perpetrated This Scam - Not The Shareholders

By , Money Morning - November 7, 2012

Haters of the big banks cheered when Federal prosecutors decided to sue Bank of America (NYSE: BAC), alleging that they defrauded Fannie Mae and Freddie Mac of at least $1 billion.

But they shouldn't have. Because no matter how satisfying it might be to see justice done after the financial crash of 2008, the truth is the real crooks have already gotten away.

Now four years later, the only people that will suffer will be the bank's unfortunate shareholders, not the bad guys who perpetrated the scams that cost a fortune during the mortgage meltdown.

After all, this wasn't the first lawsuit filed against Bank of America in this mess.

Last year the Federal Housing Finance Agency filed suit against the bank for similar offenses. And in February the bank agreed to a $1 billion settlement of a case brought by the Brooklyn attorney's office claiming fraud on guarantee claims against the Federal Housing Agency.

Also in February, the bank and five other mortgage lenders combined to agree to a $25 billion settlement of claims over mortgage fraud.

Now, according to estimates by Credit Suisse, the final cost to Bank of America of all the lawsuits relating to mortgage fraud during the bubble will come to around $40 billion.

And guess where that will come from?...

To continue reading, please click here...

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