Bank of America just transfered $72 billion of toxic debt on the taxpayers

Having the loans sent to Fannie Mae may assist in avoiding foreclosure for tens of thousands of Americans. Our local newspaper, The Sacramento Bee headlines on Sep 15, 2011 read: "Foreclosures surge in region, Troubled BofA behind much of 76% increase." "The surge was tied to new foreclosure starts by BofA. ... nearly doubled last month...announced plans to cut more than 30,000 jobs..." The news for BofA just keeps getting better and better... If they have transferred the toxic assets to Fannie Mae, it could be a good thing.

reply to post by Vitchilo

The deal, finalized last Friday, will deliver the rights to process and collect payments on a pool of 400,000 loans with an unpaid principal balance of $73 billion, people familiar with the deal said. The purchase price is more than $500 million, one ...

Do the Math....it might not be a bad deal. Lets say half the loans are absolutely worthless. The other half 200,000, are people underwater on their houses. Fannie Mae/ Government works out a Principal restructuring on those loans so people only owe $25,000 on each one, regardless of what they previously owed...... That's 5 Billion before any interest for a purchase price of 500 million. I'd make that deal any day. The supposed worth of those loans is 73 Billion, which we all know is a garbage number.

Those getting the principal reduction suddenly have a lot more income to use in the real economy. That would do more for America than any stimulus plan could ever hope to.

It might be total garbage but for the price they are getting these loans at, Fannie Mae can restructure loans to make it work for those underwater on their houses.

Someone with more background in this area would have to chime in to see if that would work.

How can the dumping 72 billion of toxic debt to the tax payer is going to be doing any good, it doesn't, the only winner on this is going to be BoA while the tax payer will have to keep bailing out the Federal backed Fannie Mae, in 2010 the prediction of the total bailout to the Trouble Fannie Mae since 2008 will top up to $215 billion from taxpayers, so how can this help the tax payer? it doesn't we will be carry the burden of this new added debt indefinitely.

BTW none of that money will be repaid back.

But rest Assure Fannie Mae CEOs will make sure that they get expensive spa treatments in California to relieve their streets all pay by the Tax payer in the nation.

reply to post by marg6043


Not all of that 72 Billion is "deadly toxic" meaning you won't recover anything. Even if only 1% of that is recoverable, that's 720 million for 500 Million, 220 million or 44% profit. Not a bad deal.

There must be more to this than what the original article states......

reply to post by pavil


Yes is more, BoA wil walk clean from the deal.

We are not going to get anything back from Franny Mae on this deal but more debt, as the TARP money they took is still no repaid and will no be repaid any time soon, actually the predictions that they will need more TARP in the years to come has grown to 215 billions.

The loses of TARP has been with Freedy and Fanny, so actually we are losing money with them.

Price Comments on the Still-Growing Bailout of Fannie and Freddie
Congressman Price commented on a report from the Federal Housing Finance Agency that the taxpayer bailout of Fannie Mae and Freddie Mac could cost an additional $215 billion over the next three years

politicalnews.me...

And this is without adding the new debt.

I don't think we the tax payer are to benefit from this at all.

Originally posted by Ferris.Bueller.II

Originally posted by macman
BofA already cooked the books on those, they also already get to collect on the Private Mortgage Insurance regardless on the unloading now, they already benefited.

OK. And where did this information come from? Can you post a reputable source? Thanks.

On which?
PMI is common knowledge. It is designed to insure the bank that either the home owner pays, or on foreclosure and during they get some payment.

Originally posted by macman

Originally posted by Ferris.Bueller.II

Originally posted by macman
BofA already cooked the books on those, they also already get to collect on the Private Mortgage Insurance regardless on the unloading now, they already benefited.

OK. And where did this information come from? Can you post a reputable source? Thanks.

On which?
PMI is common knowledge. It is designed to insure the bank that either the home owner pays, or on foreclosure and during they get some payment.

Wouldn't the PMI payments now switch to the new holder, now that B of A is no longer servicing the mortgages?

Originally posted by Ferris.Bueller.II

Originally posted by macman

Originally posted by Ferris.Bueller.II

Originally posted by macman
BofA already cooked the books on those, they also already get to collect on the Private Mortgage Insurance regardless on the unloading now, they already benefited.

OK. And where did this information come from? Can you post a reputable source? Thanks.

On which?
PMI is common knowledge. It is designed to insure the bank that either the home owner pays, or on foreclosure and during they get some payment.

Wouldn't the PMI payments now switch to the new holder, now that B of A is no longer servicing the mortgages?

If BoA put in for foreclosure, then no. I think BoA gets the PMI payment.
Could be wrong.

Originally posted by macman

If BoA put in for foreclosure, then no. I think BoA gets the PMI payment.
Could be wrong.

B of A didn't forclose on these mortgages, only sell the servicing rights to Fannie Mae who is going to resell them to other servicing company(ies) that are better suited to handle these troubled mortgages. Why would B of A still be receiving anything concerning these mortgages if they sold the servicing rights to them?

reply to post by Ferris.Bueller.II


In other words they will be passed over and over and sell over and over to agencies that will come after you with scaremongering tactics so the people involved better start changing their telephone numbers because is going to get ugly.

reply to post by marg6043


From what I've heard, that's a good bet if the homeowners' can't or won't pay their monthly mortgage payments which they signed for. But I still don't see how this benefits B of A. These mortgages originated at Fannie and Freddie with their lax standards of handing out mortgages to people unable to afford them, and should be handed back to them to determine the servicing.

reply to post by Ferris.Bueller.II


Many of the mortgages has been already bankrupted meaning that is toxic, when I read the news first it say that only toxic parts of the BofA mortgages were to be sold to Fanny Mae, so how can you go after the people that originated this toxic paper if they are not longer in the picture.

Still the mortgages came from Countrywide, so Countrywide story of bankruptcy was sold to the public as a More risk to the US economy, so the Saviour came as BofA.

Fannie and Freddie take borrower credit risk but do not service the credit risk. Countrywide could have been able to keep doing the service of loans during the bankruptcies and that would have kept Fanny and Freddie from been involved in the cost.

So why did BoA bought Countrywide? some say that is because Ken Lewis BoA CEO always had its eyes on Countrywide but when the opportunity to take it on pennies on the dollars even with all the toxic paper it could not help himself, it is said that he wanted to be in the consumer part of banking and get away from investments.

Still I guess he though that with all the TARP money going on around he could not do wrong, at the end he could always dump it on Fanny or Freddy and that is what he did.

www.portfolio.com...

I guess having the Vice president of the USA as your buddy helps a lot on decision making

The Senator from MBNA

www.nationalreview.com...

reply to post by marg6043

Many of the mortgages has been already bankrupted meaning that is toxic, when I read the news first it say that only toxic parts of the BofA mortgages were to be sold to Fanny Mae, so how can you go after the people that originated this toxic paper if they are not longer in the picture.

Can you post where you got this information from?

If a good number of the mortgage lendees in this package have already gone bankrupt, then they hold responsibility for signing for a mortgage they couldn't or wouldn't have paid back. It takes at least 2 parties to originate a contract, and all parties are held responsible for that contract.

reply to post by Ferris.Bueller.II


The talk that it was only "toxic" was in the beginning when the news of the transaction was in the talks, neither BoA or Fanny are open for disclosure and are no taking calls.

Strangely, the actual purchase price is unknown. So, too, are the contents of the mortgage portfolio, because neither Fannie Mae, its regulator the Federal Housing Finance Agency, nor the selling bank itself is talking.

The rights of the 400,000 loans will be transferred to Fannie Mae over four months, starting in September with the first slug of 100,000, the daily reported.

Bank of America and Fannie Mae could not be reached for comment. (Reporting by Amruta Sabnis in Bangalore; Editing by Gary Hill)

BofA sells mortgage portfolio to Fannie Mae

www.reuters.com...

This is more information that shows the deal could be more costly to tax payers that we think.

Earlier this year Bank of America was forced to buy back $2.5 billion in misrepresented toxic mortgages from Fannie Mae. Who knows how many of those might be underlying the servicing rights just sold to taxpayer supported Fannie Mae?

Even though Bank of America estimates the pool of loans has a 13 percent delinquency rate, many outside analysts believe the default rate on the mortgages that underlie the MSRs could be as much as double that. One financial institution that reviewed a portfolio of Bank of America MSRs, which looked suspiciously similar to what Fannie Mae purchased, estimated the loans had a delinquency rate of 25 percent.

Did Fannie Mae Bail Out Bank of America?

www.minyanville.com...

Now when it comes to the transparency of how much of this debt will be dumped on the tax payer is not transparency at all

Now will congress step in to make sure we the tax payer do not get the short end of the deal?.

Why is no one in Congress up in arms over the possibility of a half-a-billion-dollar bailout of Bank of America (BAC) last month?

Well it seems that all we are doing is speculation because the real price of the deal is unknown

reply to post by marg6043

Well it seems that all we are doing is speculation because the real price of the deal is unknown

Exactly.

Why is no one in Congress up in arms over the possibility of a half-a-billion-dollar bailout of Bank of America (BAC) last month?

Problem is somebody in Congress is 'up in arms' over this.

House Oversight and Government Reform Committee Chairman Darrell Issa, R-Calif., has launched an investigation into Fannie Mae’s recent $500 million purchase of mortgage servicing rights (MSRs) from Bank of America. Issa has written Federal Housing Finance Agency (FHFA) Acting Director Edward DeMarco asking him to provide the committee with documents and an explanation of the agency's decision-making process in this purchase.

Source.

Whether these mortgages originated with B of A or Countrywide, Fannie or Freddie bought them and recompensed the originator(s) for them, which was the root of the problem for this housing collapse. Standards for lending were very lax, and what standards did exist were frequently ignored. Many people were sold Mercedes when they couldn't even afford Hyundai. And the government agencies, Fannie and Freddie, encouraged this practice to allow more people to own their own homes, even when they knew the lendees couldn't afford to actually pay back the mortgage they signed for. Oversight was nonexistent.

they should have protests at all bank of americas across regardless if this is true BOA is part of the problem. They are greedy and chase bank is another one. Chase bank caters to the wealthy; my friend was not allowed to open up an account down in flordia because he did not make a lot of money. Chase and Bank or america needs to be the next ones to have protests. The movement needs to write up which places to go and have some more organized goals. The government bailed out the banks and not the people; we will NEVER forget!

reply to post by Ferris.Bueller.II


I agree, the only thing I don't understand is why, BofA bought country wide beside been nothing but an impulse by Ken Lewis back then, or he even got the backing of his friend Bidden that he was not going to lose anything if he did.

Just speculation, but then again why? after just barely three years this is given back to Fanny, did the government along with BofA worked something behind closed doors?.

Something fishy is going on, perhaps somebody now in Congress is doing something but until now no disclosure on the matter of what is been sold or bought out is been talk, why is Fanny Mae not talking they have no right to privacy as a public government owned entity.

reply to post by dreamseeker


Simple fact, banks are in business to make a profit. Has your friend thought about opening an account with a credit union? I've been with the same credit union for years, and will never 'bank' with a bank ever again.

reply to post by marg6043


Could be, if more details do surface, that Biden 'guaranteed' B of A that the government will 'assist' in any debts B of A wants to get rid of if they do pick up Countrywide.

reply to post by Ferris.Bueller.II


I wonder if this become another scandal under Obama, look at what I found from back in 2010,

BoA settles Freddie Mac & Fannie Mae mis-selling allegations

Bank of America (BoA) has announced that in the fourth quarter of 2010 it expects to take a provision of approximately $3 billion relating to repurchase obligations for residential mortgage loans sold by its affiliates to US government-backed mortgage lenders, Freddie Mac and Fannie Mae.

The bank says it has resolved “substantial legacy issues” regarding claims arising out of alleged breaches of selling representations and warranties relating to loans sold by Countrywide.

Freddie Mac has received a cash payment of $1.28 billion and a Fannie Mae a cash payment of $1.34 billion.

www.bankingtimes.co.uk...

This two has been working together all along, but the question is how much government involvement is behind this.