Almost A Million Mortgages Were Improperly Securitized

Elliott Spitzer in Slate article What Clayton Knew, writes: (Loan) documents, from Clayton Holdings, a due diligence company retained by the banks, reveal that Clayton, after analyzing more than 900,000 mortgages, told the banks that about 30 percent of the loans being packaged into securitized products did not satisfy the banks’ own underwriting standards. This meant that the securitized products were almost bound to blow up.

So what did the banks do? They essentially ignored this information. We all know why: The process of securitization shifted the risk to others, and the banks were making too much money by continuing to push the deals through the pipeline.

(The banks) apparently withheld from investors that critical information about the quality of the bonds they were selling.

Tyler Durden in article Fannie, Freddie To Pursue Putbacks, Subpoena JPMorgan, Among Others, In Seeking Loan Level Detail writes: “As we previously disclosed, it is precisely this ongoing action that Bank of America and Wells Fargo have been (under)reserving against: and if the GSEs, together with the FRBNY, Pimco, BlackRock and who knows who else, are sensing the current moment as one of terminal weakness for the mortgage servicers, who knows how many billions in mortgages could be putback to the TBTF banks, who are luckily flush with still fresh taxpayer cash and trillions in excess reserves. Either way, it appears that while the New York Fed is going after BofA, the GSEs are about to dine on Jamie Dimon. Either that, or all this is a smokescreen to promptly settle all current and future possible litigation in an adversarial process involving government entities, and thus streamlined to a mutually amicable resolution.”

Andre Damon of Investment Firms, New York Fed Demand Bank Of America Buy Back Mortgages


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