The number one lender in the country admits it sold faulty information on loans to Fannie Mae and Freddie Mac and will pay more than over $2.6 billion to settle claims. The lender giants backed by the government is trying to force other lenders to buy back loans that may have been made with incorrect data on income and home values.
Perhaps this is a lesson for investors and lenders that being greedy isn’t necessarily a good thing and if you do wrong it will end up back in your lap at some point. Hence why the lender who bought Countrywide is now facing all these issues, after all Country wide was notorious for having specialty mortgage products. No doc loans, stated income loans, no ratio and the gambit of other creative mortgage loans is finally rarely its head. Unfortunately, Bank of America isn’t the only lender facing buying back mortgages. Bank of America faced buying back $12.9 billion in unresolved putback demands on soured mortgages, with about half related to government sponsored entities.
It isn’t surprising the lending giant had a reserve of over $4.4 billion for costs related to the problem. What does this tell you? Sadly to say it was something they expected to deal with when they purchased Countrywide. The windfall of foreclosures and the accusations of many of the large lenders falsifying foreclosure documents have only added to the large issue at hand.
So what is the lesson to be learned here? Perhaps nothing at all, except that capitalism is alive and well today as it ever was. In the end though who really pays for the greed of others? The everyday paying citizen does the government, your grand children and so greed pays it forward every day. Yet, we sit and absorb it like candy, not even really thinking how it affects us in the long term.
