More on BofA being sued by the U.S.


Bank of America (BAC -1.1%) defrauded investors by packaging and selling prime jumbo loans whose poor underwriting made them just as risky as subprime loans, according to the DOJ filing.

The loans were made in 2007 and packaged and sold as $850M in MBS in 2008. Investors have already lost $70M with another $50M in losses expected, says the DOJ.

The suit is not terribly unexpected as the bank last week disclosed the DOJ was probing a couple of jumbo mortgage securitization deals.

The case is the first federal suit brought by the President's RMBS Working Group. It's a civil suit, and only the bank has been named. The stock is off a few more pennies than it was 30 minutes ago.

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Comments (6)
  • svrionis
    , contributor
    Comments (18) | Send Message
     
    With all the headlines you'd think we werent talking about 70 million in losses during a financial crisis. This is incredibly minor.
    6 Aug 2013, 05:06 PM Reply Like
  • mcdonaldfive
    , contributor
    Comments (40) | Send Message
     
    Is there really a win-able case here? Purchasers of the MBS have lost about 9% after six years - or 1.5% a year. I would think BAC would have a pretty easy time defending their actions. In the housing boom times the default rate on mortgages was 1% per year. I'll be interested to see how this particular case plays out in civil court where the burden of proof is less stringent.
    6 Aug 2013, 06:42 PM Reply Like
  • healthpicker
    , contributor
    Comments (1098) | Send Message
     
    "The case is the first federal suit brought by the President's RMBS Working Group. It's a civil suit, and only the bank has been named."

     

    BAC shareholders get ready to rock and roll - only the current shareholders will pay - no problem.
    6 Aug 2013, 09:31 PM Reply Like
  • moneyTalksBSWalks
    , contributor
    Comments (194) | Send Message
     
    Looks like a shakeout was attempted and failed. A case for 70 Million. Seriously!!
    6 Aug 2013, 10:14 PM Reply Like
  • jackooo
    , contributor
    Comments (1738) | Send Message
     
    Didn't anyone check what they bought? It looks like the average citizen bought these mortgages, not!!
    7 Aug 2013, 11:18 AM Reply Like
  • healthpicker
    , contributor
    Comments (1098) | Send Message
     
    This case is not so much about damages as "crime and punishment". I really can't see the first case being brought by the President's RMBS Working Group being a failure.
    7 Aug 2013, 02:58 PM Reply Like
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