Here We Go -- US to Sue Banks Over Housing Bubble Mortgages

Source -- BBC

The US is planning to sue more than a dozen major banks for misrepresenting the quality of mortgages they sold during the housing bubble, the New York Times reports.

Bank of America, JPMorgan Chase, and Goldman Sachs are to face action, the newspaper quotes sources as saying.

The following is from the NY Times Article mentioned by the BBC.

The suits will argue the banks, which assembled the mortgages and marketed them as securities to investors, failed to perform the due diligence required under securities law and missed evidence that borrowers’ incomes were inflated or falsified. When many borrowers were unable to pay their mortgages, the securities backed by the mortgages quickly lost value. Fannie and Freddie lost more than $30 billion, in part as a result of the deals, losses that were borne mostly by taxpayers. In July, the agency filed suit against UBS, another major mortgage securitizer, seeking to recover at least $900 million, and the individuals with knowledge of the case said the new litigation would be similar in scope.

-Lightrule

reply to post by Lightrule


Now what I see happening here is Obama setting up some public relations going into the elections. He will score major points with homeowners, sorry ex-homeowners by touting he is going after the bankers responsible, something almost everyone wants to see these days.

When going into poorer areas of the country watch for him to bust out lines like this,

"Just a few weeks ago I sat down with the white house legal team and I said, "Look here, people in America are homeless, the banks have broken the rules we need to go after the banks responsible." I held this meeting because I feel your pain. America is a strong and fair country that looks after its people. That is why I am going after the banks that took our homes, I'm doing it for the people of the United States of America, my brothers and sisters."

It will be easy to delay the courts in a case like this, there are hundreds of thousands of mortgages to sort out. Then all of a sudden once elections are over we will see many banks and their executives get off with small slaps on the wrist. None will see jail time, a monetary fine will be the best justice we can hope for. These fines will be small percentages compared to what the banks stole in the past 3 years. Don't forget they made money from the actual physical property, interest, illegal trading of securities (the mortgage itself), and even more other complicated financial wizardry. (Derivatives anyone?)

-Lightrule

That is funny.

I can see it now.

Banks: Your Honor. They have no standing. (Drops a huge number of cases thrown out due to no legal standing)

Although this does come as a relief to me, I think that your theory is pretty accurate, seems perfect. He's already kille Bin laden, now all he needs to do is go after the banks, people will buy it hook line and sinker. Cheers

The US is sueing the banks?

Aren't the banks already bankrupt but still kept alive by printed and tax payers money?

Title should read "US sues American Taxpayers for bailing out banks".

This is BIG! Real BIG!

Either the smartest or dumbest approach ever.

Dumb because it may spark a global financial meltdown.
Smart in that it may finally end the banks and the FED's hold over U.S. citizens and lead to new prosperity.

I believe the latter.

Originally posted by CasiusIgnoranze
The US is sueing the banks?

Aren't the banks already bankrupt but still kept alive by printed and tax payers money?

Title should read "US sues American Taxpayers for bailing out banks".

The true titles should be...

"People of the USA sue the US Government for letting the banks sell the houses out from under them."

or "US Government sues itself for bailing out criminal bankers with taxpayer money."

Its significant because the US government is recognizing it as wrong. Of course like I said before, not one banker will serve one hour behind bars. The final judgement for wall street will be the same as it has in times past. A monetary fine, one that will be significantly lower than even 1 years worth of profit for these major banks.

To take my prediction a step further I'll go so far as to say that the smallest fine will be given to the bank that donates the most money to the winning election campaign.

-Lightrule

Banks have socialized their losses but privatized their benefits.

They've done it with help from Western Administrations, out there in the US and down here in corroded EU. And now we're supposed to believe they're going to sue them (which I hope they did)?

IMHO this can be one out of two:

1) Our Administrations are rioting against their handlers.
2) Our Administrations are doing entertainment acting to favor re-election.

Which one tells your guts to pick?

Yeah, me too

This Is a bad idea where do they think the money
will come from if they do fine them. Hopefully
the people would see threw this. They dont care
about the money its the power if you want to
punish them take away their power.

This is nothing more then a ruse by Obama for his Re-election campain. It's quite obvious.

Why "Save" and bail out these banks in the first place, if you going to turn around and Sue them?

I am sick and tired of how shady our government has become.

Screw the election talk. what is right and fair?

The banks wont loan money and they foreclosed on peoples homes yet they were bailed out.

You do the math. You know that bailout? Seriously it could have possibly been used, and should be viewed as a payoff of every mortgage they foreclosed on and those homes given back to the people who owned them. That money was collected from taxpayers, it was your money. While congress can collect taxes and spend it where they need to spend it, who spoke up for you folks and the families who could have been sending their kids to college, or buying groceries, a new car and or paying utility bills but instead found the pavement?

Folks, this is your country. Your homes are your little piece of it and something every parent works his life for. If the banks ask for help, then turn and take more money from you and even your home, its like being taxed onto the street. Literally. I hope every family who lost their home gets it right back with debt forgiven as damages.

What bothers me is this.

failed to perform the due diligence required under securities law and missed evidence that borrowers’ incomes were inflated or falsified.

This sounds to me like when people went to banks they lied about their income and the person doing the checks overlooked it. (Do they have proof the people lied, or did the banks lie on their own?)What makes it worse is that since someone falsified income on those loan sheets, they actually took loans that they couldn't repay. It would be interesting to know the interest rates of those home loans btw because they likely weren't very low or reasonable and could further show that the loans were unable to be re-paid to begin with.

Bank of America, JPMorgan Chase, Goldman Sachs and Deutsche Bank.
Who the hell is this Deutche bank?

The attorneys general, as well as federal officials, are pressing the banks to pay at least $20 billion in that case, with much of the money earmarked to reduce mortgages of homeowners facing foreclosure.

Who thinks that 20 billion will cover the interest?

In addition, by law Fannie and Freddie were required to back loans to low-to-moderate income and minority borrowers, and the private-label securities were counted toward those goals.

So they are required by law to back low income families, in other words the poor people in the US to take on loans that the families couldn't pay anyway. This was a nasty cycle. The result was tons of foreclosures and the banks getting property deeds they wouldn't have otherwise owned, with fannie may and freddie mac left with the debt and people on the street?

Freddie Mac holds more than $80 billion in mortgage securities backed by more shaky home loans like sub-prime mortgages, Option ARM and Alt-A loans. Freddie estimates its total gross losses stand at roughly $19 billion. Fannie Mae holds $38 billion of securities backed by Alt-A and sub-prime loans, with losses standing at nearly $14 billion

Originally posted by Lightrule
Source -- BBC

The US is planning to sue more than a dozen major banks for misrepresenting the quality of mortgages they sold during the housing bubble, the New York Times reports.

Bank of America, JPMorgan Chase, and Goldman Sachs are to face action, the newspaper quotes sources as saying.

The following is from the NY Times Article mentioned by the BBC.

The suits will argue the banks, which assembled the mortgages and marketed them as securities to investors, failed to perform the due diligence required under securities law and missed evidence that borrowers’ incomes were inflated or falsified. When many borrowers were unable to pay their mortgages, the securities backed by the mortgages quickly lost value. Fannie and Freddie lost more than $30 billion, in part as a result of the deals, losses that were borne mostly by taxpayers. In July, the agency filed suit against UBS, another major mortgage securitizer, seeking to recover at least $900 million, and the individuals with knowledge of the case said the new litigation would be similar in scope.

-Lightrule

edit on 2-9-2011 by Lightrule because: (no reason given)

Adding to yesterdays post... The BBC has released another article today with updated information.

US regulator to sue banks over subprime mortgage losses

US authorities are to sue 17 major banks for losses on mortgage-backed investments that cost taxpayers tens of billions of dollars. The Federal Housing Finance Agency said it was taking action against banks including Goldman Sachs, Barclays, Bank of America, Deutsche Bank, and HSBC. The agency says they misrepresented the quality of the mortgages they sold during the housing bubble. The values plunged as the US was engulfed in the financial crisis. The FHFA oversees mortgage giants Fannie Mae and Freddie Mac. The two firms lost more than $30bn (£18.5bn), partly because of their investments in the subprime mortgages, and were bailed out by the US government. Since the rescues, US taxpayers have spent more than $140bn to keep the firms afloat. Other banks facing action include Royal Bank of Scotland, Nomura, Deutsche Bank, Citigroup, and Societe Generale. A spokesman for RBS said: "We believe we have substantial and credible legal and factual defenses to these claims and will defend them vigorously."

I'd love to hear what he thinks are "factual defenses", what a clown. Its interesting to note that foreign banks are listed, personally I think if a bank, any bank is going to own your house it should be in the country your house is located in. Businesses are one thing but private personal homes are completely different.

-Lightrule

By proxy, if the government was defrauded in the resale of these mortgages, then the mortgages themselves are no longer valid. If Obama wants to be relected he will declare all these mortagges null and void, screw suing the banks.

Ok. That action is what needs to happen but we all know it will leave the economy in ruins. Instead let anyone who has a mortgage refinace it directly with the government at curent market value and market rate interest(4-5%). Pay off the banks and investors and send them home without the ball. If their loans get paid andthey still fail then it's only their own fault.

reply to post by Nephalim


Option ARMS and ALT- A's are not loans to the poor. Nor was it low income loans that caused the housing crisis. They were a minor part and that is it. That whole part of your commentary runied the rest of it.

reply to post by Lightrule


Just more dog and pony show for up coming elections. Will the millions who are put out of their homes get them back or be compensated? No! Will it stop them from continuing to put people out of thier homes? No! Will it stop the fraudulent loan scams where no money is ever actually loaned to the buyer but the buyer basically gives the bank a promissory note and that is newly created money for the bank who then uses fractional banking fraud to parley it into millions? No! Will it help the housing market recover? No!

It all bull# as George Carlin said and the majority still do not get how it works and will call you a liar when you explain it to them so the beat goes on... Same ole same ole...

There are thousands of similar lawsuits all over the place.

Some by local and state governments and by companies.

This new one could be a cover to somehow nullify the older ones.

The banks get more time.

Besides, think about who gets paid big money in the meantime .....

right ..... the lawyers and staff and court systems !!!

Wednesday, November 10, 2010

Lawsuits against banks over their mortgage lending and foreclosure practices continue to pile up, with JPMorgan, PNC Financial Services and Ally Financial disclosing suits on Tuesday.

JPMorgan Chase & Co. faces two possible class action lawsuits related to foreclosures, the No. 2 bank said in a regulatory filing.

The suits allege "common law fraud and misrepresentation, as well as violations of state consumer fraud statutes," JPMorgan said in the Securities and Exchange Commission filing, without disclosing who filed them.


Read more: Foreclosure suits against banks mount - Pittsburgh Tribune-Review www.pittsburghlive.com...

Posted 29 Oct 2010

According to an article by Charles Toutant at law.com, Bank of America (NYSE: BAC) was cited in a New Jersey class action complaint on behalf of mortgagors who have pending foreclosure actions in that state. Toutant writes in the article:
Class Action Lawsuits Against Bank of America (BAC) – Who’s Next?

reply to post by sligtlyskeptical


Yea what you saw there was me trying to make sense of it.
Nothing was clicking there for me, at that point I left it alone.
Thanks for the info.

Fun and games,y'all more fun and games. As mentioned in earlier in the thread a little public relations ploy heading to the elections and the tragic thing is a good amount of people will buy it,people who should know better.

Well who'd have imagined it. Another dog and pony show in the run up to elections.

The banks will get fined, amounting to a fraction of what they made fraudulently, and not a single bank exec, SEC or Wall Street suit will see the inside of a jail cell. Pure theatrics!

Remember not so long ago the rather muted MSM coverage of the big banks and the $Billions they were laundering in drug money? Easy to miss as the MSM didn't make a big deal about it, but again they paid a few $Million in fines, were given a verbal slap on the wrist and ......... business as usual.

Anyone still think the bankers don't rule over us and the government is subservient to them?

Love the people here saying the Gov should nul and void the mortgages. Or that the bailout money should of been used to pay off the foreclosures.

Genius idea guys. /sarcasm

What about the people who knew better then to go buy a 300k home when you are only making $15/hr?
Is it our fault people who bought homes did not read their contract? Why should anyone get a free ride for being stupid, gullible, or just plain uninformed on how mortgage contracts work?

Should I and others like me have to cover the cost for those that wanted to use their house as a credit card?

Tough luck imho if you made a bad choice man up and deal with it. Really the Government has already done enough. We don't need the type of assistance they always offer.