A dozen big banks face being sued for billions of dollars by the American government agency that oversees US mortgage markets.
From Sky News:
According to The New York Times, the Federal Housing Finance Agency (FHFA) is preparing to file lawsuits against banks including JP Morgan Chase, Bank of America, Goldman Sachs and Deutsche Bank, accusing them of misrepresenting the quality of their mortgage packages.
The organisation that supervises mortgage giants Fannie Mae and Freddie Mac says that the banks wrongly bundled up and sold mortgages to investors during the housing bubble of 2006-2007.
The Times says three individuals have been briefed on the cases, which stem from orders the finance agency issued to the banks last year.
The American government is seeking billions of dollars in compensation, claiming that the banks failed to perform correctly and overlooked that borrowers’ were taking on mortgages that they could not afford.
Fannie Mae and Freddie Mac lost over $30 billion when the housing bubble burst in 2008.
Some of those losses, were a result of the mortgage-backed securities the companies had bought and taxpayers’ were subsequently hit with the bill.
In July, the FHFA sued UBS to recoup $900m of taxpayers’ money, a case which individuals expect the new action to follow in a similar way.
A spokesman for the FHFA said that the banks were not available for comment. (Oh gee I wonder why!)
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