Second verse, same as the first. Since the housing collapse of 2008 brought to light misleading, fraudulent and downright illegal tactics by the country’s major lenders, lawsuit after lawsuit has been filed by both government and private entities against these megabanks. But in spite of all efforts to clean up the dirty side of mortgage lending, the charges just keep coming. Witness the latest pair of lawsuits, filed just this week against perennial malefactor Bank of America.
These new legal actions were initiated by the Justice Department and the US Securities an Exchange Commission in separate filings, accusing BofA of fraud involving $850 million of mortgage-backed securities dating back to the start of the housing collapse in January 2008.
According to a new Reuters report, the twin lawsuits claim that Bank of America made “misleading” statements and concealed significant information about the mortgages, all of which were connected to a single securitization. A number of these mortgages were considered subprime and failed to meet mortgage underwriting standards, the suits claim.
These charges are only the latest in a long
string of legal actions that have caught Bank of America with its figurative fingers in the figurative cookie jar. The bank, along with a number of other leading lenders including Citibank and Wells Fargo, agreed in 2010 to a massive settlement relating to the “robosigning” scandal that pushed forward numerous fraudulent foreclosures. After that, several civil suits were filed accusing BofA of manipulating LIBOR rates to their advantage in international markets.
The current suits, like their predecessors, make a clear connection – once again – between major mortgage lenders and the housing collapse, when mortgage holders all over the country, faced with ballooning mortgage payments they didn’t understand and couldn’t pay, fell into foreclosure. Back then, lenders such as BofA generated mortgages with wild abandon, selling loans to underprepared homeowners who failed the bank’s own lending standards.
For its part, Bank of America claims that the, mortgages in question were not misrepresented, they were sold to savvy buyers who understood all the ramifications of the loan, and that it’s all a big misunderstanding. But those statements, which also stoutly assert that BofA bears no responsibility for the housing crash, aren’t stopping the string of lawsuits.
These new cases, along with others still in the works against the country’s other major lenders, continue to show that cleaning up the mortgage industry still has a long way to go. The continued fallout from the housing crash remains a drag on the recovery of the housing market, with consequences for both residential homebuyers and inventors buying Income properties with fixed rate mortgages as Jason Hartman recommends. (Top image: lickr/TheConsumerist)
Source: “US Accuses Bank of America of Mortgage-Backed Securities Fraud.” Reuters via Yahoo Finance. Yahoo.com, 7 Aug 2013
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