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“Mortgage guarantors such as MGIC Investment Corp., Radian Group Inc., and American International Group Inc.’s United Guaranty have been voiding policies for errors including inflated appraisals or borrower incomes.”

EDITOR’S NOTE: DOUBLE STANDARD: The insurers are dropping coverage because the mortgage was a sham. The appraisal was faked and the borrower’s income was faked as well — by the lenders. So BOA is not contesting the insurer’s right to drop coverage which is an admission that indeed the appraisals were faked along with the borrower’s income, which makes the entire mortgage a sham. But when the borrower comes into court pleading sham transaction, the borrower is given short shrift — “you borrowed the money and you didn’t pay it back. End of story.”



Bank of America Corp. (BAC) told Fannie Mae it refuses to cooperate with the U.S. mortgage firm’s new stance on loan buybacks, setting the lender up for a potential surge in claims and penalties.

The bank is disputing Fannie Mae’s demand that lenders repurchase mortgages or cover any losses themselves if an insurer drops coverage, Bank of America said this month in a regulatory filing. The lender, ranked second by assets among U.S. banks, said it “does not intend to repurchase loans” under what it deems to be new rules, and the refusal may trigger penalties or other sanctions.

At stake is Bank of America’s ability to contain costs from faulty mortgages, which have reached about $40 billion for refunds, lawsuits and foreclosures. The company set aside $278 million for loan buybacks in the third quarter, the least since Chief Executive Officer Brian T. Moynihan took over almost two years ago. Those expenses may rebound if Fannie Mae’s rules stand, the bank said.

Fannie Mae didn’t enforce this policy before because “it was a different economic time,” said David Felt, a former deputy general counsel at the Federal Housing Finance Agency, the regulator for Fannie Mae. Defaults were fewer and the firm didn’t want to harm relations with lenders by being too picky, he said. “They’d overlook the small things. Well, they’re no longer small things, and they’re no longer the old Fannie Mae.”


According to Fannie Mae, lenders were always contractually required to ensure that mortgage insurance was maintained. A guide dated June 30 requires lenders to alert the Washington- based mortgage financing firm of coverage withdrawals within a month of the event and gives them 90 days to appeal a repurchase demand. After June 2012, banks have just one month for appeals.

“Our contracts are clear that when a mortgage insurance company rescinds the required mortgage insurance, the loan is subject to repurchase by the lender,” said Amy Bonitatibus, a spokeswoman for Fannie Mae.


9 Responses

  1. Lets start with subprime refinances — not refinances at all.

  2. Does “without recourse” not mean “without recourse?”

    How can “without recourse” allow for “repurchase?”

    If so, such note “endorsements” appear also to be also fraudulent.

    ALSO, HOW can B of A “repurchase” what it never owned in 1st place?



  5. Hey something occurred to me. Pursuant to US Const. Art. Amend. X “the People” are the only body politic Constitutionally vested with the Powers to conduct nationwide independent Fraudclosure reviews for wrongful actions of depravity taken by Pretender Lenders.

    Am I wrong Neil?

  6. Nora C,

    F/F neck deep – for sure. Every single subprime refinance was a former GSE loan.

  7. @Nora,

    I do what you do: I keep repeating over and over that they all will get what’s coming to them. When i get a little discouraged (that house fight is literally holding me hostage and I resent it!), I start writing it down to comfort myself into the idea that yes! there is a justice, even in this world, and we will see it.

    Just taking an awful long time for its wheels to turn…

  8. Fannie and Freddie are neck-deep in the mortgage fraud, pointing fingers to lead the eye away from themselves. After discovering that Taylor Bean Whittaker had sold her millions of dollars worth of bogus loans, some of which TBW didn’t even own, Fannie failed to report it to any authorities. She chose to protect the huge profit stream from servicing the loan portfolio, rather than uphold the law and let it get out that the assets were compromised, and cut TBW loose, instead.

    As far as sharing responsibility, I don’t get that from any statements Fannie or Freddie made, not even the admisssion that underwriting was the stuff of fairies and leprechauns during the feedy frenzy years of raping the borrower without conscience. Fannie and Freddie are complicent; they aren’t going to outlive this crisis and they know it, even if it takes a long time for Law and Justice to rise from the quagmire and smite them over the head with her brass bawls.

  9. It should not be possible for the MI companies to rescind anything. They accepted the loan and in doing so, they should have had the key elements in place to detect underwriting variances. They took the premiums while they could and now they are attempting to rescind the coverage. MI companies have a duty to underwrite the loan before they sign off to issue the mortgage insurance – we called it UW pkg 2, do they not U/W any more. Perhaps the MI company allowed the U/W for the lender to approve for them as well and if that did happen, where was the quality control early on by the MI company and 2) Fannie and Freddie should be looking to the MI company for poor U/W practices. Bank of America should repurchase the loan on the one hand, but the MI Comapny, Fannie and Freddie, should have to hold onto it because they had supposedly good quality control in place that would have stopped the false approval of loans that did not qualify back in 2008 – Let;s face it, F & F were attempting to get market share and overlooked the U/W to the extent that they were possibly aiding and abetting the lender. This means to me that F & F want the world to believe that the feds pressured them sufficiently to force the loans to be made, but I have never believed that to be the truth. Even if it had the hint that F & F were forced to make these loans, then that would not be a reason to go after B of A. B of A is not one of my favorite banks and I have had to fight them constantly over foreclosures of peoples homes, but let’s be clear. F & F knew what they were getting so that means to me, they were doing their share of the wrong doing.

    I know all of this sounds bad, but B of A has a lot to take responsibility for, but F & F also had a duty to the stockholders and the borrowers whose loans they purchased, to run a tight ship and they did not. That is why F & F is sharing in the responsibility for the demise of the housing industry and of course, the meltdown of this economy.

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