Banks Resisting Fannie, Freddie Demands To Buy Back Mortgages
Posted By thestatedtruth.com on November 30, 2010
Buy back mortgage contracts are getting interesting. It looks like a cat fight just starting…… You don’t think the banksters want to own that crap they sold to Fannie and Freddie do you? They thought it was a free ride. But now it doesn’t look so free……The expected amount so far refused exceedes $120 billion. This is just another problem for the Western financial world.Â
Fact: Securitized debt was manufactured to be sold, not to be bought back. It looks like the banks are getting their comeuppance!
2010-11-30
By Lorraine Woellert and Clea Benson
Fannie Mae and Freddie Mac are facing growing resistance as they attempt to push failed home loans off their books and onto the balance sheets of banks including Bank of America Corp. and JPMorgan Chase & Co.
The two government-owned mortgage companies are enforcing contracts that require lenders to buy back loans that didn’t meet underwriting standards. At the end of September, the companies reported, banks hadn’t responded to $13 billion in buyback requests. A third of those were at least four months old and Freddie Mac has begun to assess penalties for the delays.
Lenders say they are resisting buybacks because McLean, Virginia-based Freddie Mac and Washington-based Fannie Mae are unfairly second-guessing old appraisals, accusing originators of failing to verify income, or pinning failed loans on minor technical errors. Larger banks say they can handle the potential losses. Some smaller lenders say the strain could sink them.
About 40 percent of repurchase requests are rescinded after lenders provide additional paperwork, said John A. Courson, chief executive officer of the Mortgage Bankers Association, a Washington trade group.
“We’re burning a lot of stockholder resources, and clearly a lot of Fannie and Freddie resources, to have 40 percent of these things rescinded,†Courson said in an interview. “It hurts the banks and frankly we’re wasting government resources, too.â€
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