Posted on 02/24/2011 6:25:33 PM PST by FromLori
One of the straightest paths this country could take toward Bank Bailout 2, the Sequel, would be through forcing financial institutions to buy back the lousy mortgage-backed securities they sold before the meltdown. Large-scale buybacks could open gaping wounds on bank balance sheets, a risk Bank of America (BAC) is particularly vulnerable to because it swallowed Countrywide's gigantic -- and now infamously fraudulent -- mortgage machine. Regardless of that risk, banks should have to follow the rules of their contracts, and the law. But getting BofA to buy back its mortgage junk won't be easy.
As of June 30, 2010, BofA faced some $11 billion in requests for repurchase of such securities. Most of those requests came from government-sponsored entities such as Fannie Mae, from bond insurers, and from major investors. Less than a third of a percent -- $33 million -- were from so called "private label" buyers.
But those securities-holders are now beginning to make their demands, too. Investors in more than $1 billion of securities backed by 2006 vintage Countrywide mortgages have filed an unusual lawsuit to try to get many of those mortgages repurchased. That case, filed Wednesday in New York state court, is Walnut Place LLC v. Countrywide Home Loans Inc, and is one of the first investor putback efforts.
(Excerpt) Read more at dailyfinance.com ...
ping
How many people lost money in their pension/401’k’s thanks to these guys.
How will this affect my IRA. It matures in 12 and I can’t wait to get it out of that craphole. It’s getting darn good int. 3.49 is hard to give up.
What to do....what to do...
I don’t think this should affect your IRA this is for all the bad loans the banks sold before as MBS’s and if your IRA was invested in those through a bond for example it would have already been affected in the crash. This could be a great thing for people who lost money though because of the banks they might have a shot at recovering some of it.
And until homeowners make their final payments and be notified later they can never get a Notice of Satisfaction and/or a clear title, they'll never really realize the extent of the damage done.
From what I’ve seen, BAC has about two and a half years’ worth of put-back liabilities which flatline every cent of its income for shareholders. That is, if all the chickens don’t come home at once.
For an investor, two and a half years without a dime’s worth of income is simply taboo, plainly intolerable; and if there’s any “bonuses” paid for this kind of shape, we can be assured there’s serious accounting FRAUD.
Yes I agree, it's a screwed up mess, cultivated by the greedy bankster and his ilk.
Holy cow that’s worse then even I thought.
Thanks.
It’s really worse than BAC’s management wants the public to know.
The realization of how deep this situation is for BAC really stunned me. I realized BAC can’t “make” $3B per Q and have “put-backs” of the same or more per quarter and still pay shareholder dividends or show any stock growth. I must refer you back to Q3 of 1010 and Q4 of 2010 reports and the put-backs they had made. In Q3, 2010, they made $3B and their liabilities were something like $10.6B. It was estimated their share of total liability is some $69B USD and at a $3B per quarter income and sustaining a $3b per quarter loss, that’s 11 1/2 quarters or something over two and a half years’ of losses. For Q4 of 2010, FMa and FMc hit BAC for some $2.8B wiping out almost ALL of that quarter’s profit. If all BAC’s liabilities for put-backs are forced by litigation and come due at once, they are toast - a burnt offering.
My numbers may be a little off, but the evidence points to eventual “receivership” without QE ad brokeum.
I see what your saying I guess I thought because BOA put Billions aside for put backs and they were allowed to screw the taxpayers through Fannie for a penny on the dollar on $117 Billion worth of toxic loans they were now sitting a little better.
“But how sharp is Freddie if all it can do is squeeze a $1.28 billion payment out of a giant customer in exchange for relinquishing fraud claims on $117 billion worth of outstanding loans? The very best its million-dollar executives can do is claw back a penny on each bubbly subprime dollar?”
http://finance.fortune.cnn.com/2011/01/03/is-fannie-bailing-out-the-banks/
Well, you have to realize the $1.28B is not a final settlement, it was to cover only the sour note defaults up to that date. Let’s presume 80% or $94B are sound. That leaves us with $23B - $1.3 to settle. With $22B outstanding, that leaves roughly another 80% to put back and it’ll take many a $2B quarterly write-downs to break even - roughly 2 1/2 years.
I envision lots more defaults up the tracks - strategics as well will be adding to the totals, further increasing BAC’s exposure.
It’s not good and won’t be “good” for some time to come...
But, I could be wrong. FedGov may yet bail out again.
Thank you that gives me a much clearer picture. I hope we don’t get stuck having to pay for even more of their toxic loans. I see there is an obama deal in the works on foreclosures and to me it doesn’t match the smell test, knowing where his support came from and how much in put backs the banks are looking at.
http://www.freerepublic.com/focus/f-news/2679708/posts
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