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More on BofA (BAC): talks with Fannie Mae (FNMA.OB) over the latter's request that BofA buy back...

More on BofA (BAC): talks with Fannie Mae (FNMA.OB) over the latter's request that BofA buy back billions of dollars of bad mortgages have become more constructive recently, Reuters reports. In its 10-Q, BofA said that of $10.1B in unresolved claims, $7.3B relate to loans in which borrowers have been paying for over two years. (earlier)
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Comments (11)
  • Tom Armistead
    , contributor
    Comments (5410) | Send Message
     
    Bank of America needs to get over this idea that there is a 2 year statute of limitations on underwriting malfeasance. It's not in the contracts.
    3 Aug 2012, 05:54 AM Reply Like
  • bbro
    , contributor
    Comments (9834) | Send Message
     
    Tom...help me in this thought process...a loan is made the person makes 30
    payment then defaults the malfeasance is in the original assumptions
    given to the investor? or where?
    3 Aug 2012, 06:08 AM Reply Like
  • Tom Armistead
    , contributor
    Comments (5410) | Send Message
     
    bbro,

     

    The malfeasance is in not conforming to stated underwriting guidelines when granting the mortgage. If the value of the property was inflated by a bogus appraisal, or if the debtor's other financial obligations weren't checked, or if the occupancy was mis-stated, or if the debtor's occupation and income claimed were patently ridiculous, then it doesn't matter how long payments were made.

     

    If the loan didn't comply with representations and warranties when issued, it is subject to putback - even if payments are current.

     

    The issues here are contractual. The agreements are complete and in writing. BAC persists in including extra-contractual provisions. Moynihan is a lawyer by training and he took Contracts 101. The whole thing is bizarre.

     

    I worry about you, always defending BAC, I hope your position is right size.
    3 Aug 2012, 06:21 AM Reply Like
  • bbro
    , contributor
    Comments (9834) | Send Message
     
    Tom I tend to lean against the crowd...If everybody on here were Pro Banks I would probably point out the grave transgressions...I am not pro Bac as much as my commentary on SA might indicate....only investing positions
    I like about BAC are their bonds and some preferreds...the stock is a dog...thanks for your comment...
    3 Aug 2012, 06:40 AM Reply Like
  • Mike Maher
    , contributor
    Comments (2610) | Send Message
     
    As a lawyer he also knows that poorly written contracts can be gotten out of. Given all the mistakes of Fannie and Freddie, and Countrywide Financial, I'd be willing to bet that their contracts are not as cut and dry as a normal person would think. Moynihan's job is to do whats best for BAC shareholders, and whats best is to try to make these claims go away, anyway he can.
    3 Aug 2012, 08:22 AM Reply Like
  • FranzZemen
    , contributor
    Comments (28) | Send Message
     
    What is this story implying, that people with bad mortgages are paying so......its ok?
    3 Aug 2012, 05:56 AM Reply Like
  • MexCom
    , contributor
    Comments (3053) | Send Message
     
    This is a continuation of them taking on Countrywide. The payment performance on mortgages in general are improving. Yes, there were bad loans and some were bundled into the securities in question - that's part of the mortgage business. But the fact remains that most mortgages are current in their payments and if they want to have them to buy back the securities they should sell back all - including the those that have never missed a payment and all of the interest they have earned from these securities. This would result in a capital gain for the bank.

     

    You got to dig deeper into the Reuters story to see that they are not providing all the facts on the issue and do not provide a balanced coverage on old news.
    3 Aug 2012, 06:09 AM Reply Like
  • bigTTT
    , contributor
    Comments (258) | Send Message
     
    This has me in the middle. I own Fannie Mae and BAC. lol Country Wide was a joke and the people there should be in JAIL. But they weren't the only ones that should be in jail. Everybody and their brother was doing it. Wall Street was in on it too. Now there are some, that say, "well, BAC took over Countywide and was conned too. So they should make everything right for the rest of us". That my friends is simply, B.S. If it wasn't for BAC taking them over. This would have been a far bigger mess than you could have ever imagined! People need to, 'Man Up', and shoulder the burden!
    3 Aug 2012, 09:19 AM Reply Like
  • Tom Armistead
    , contributor
    Comments (5410) | Send Message
     
    bigT,

     

    Nobody conned Ken Lewis, he himself was a master of the art.

     

    His thinking on Countrywide was, its a can of worms, I always get away with stuff like they do, so what the hey. We should be able to stiff everyone on R&W and make a lot of money. If not, we'll just let it go BK.

     

    Basically he figured he could make good on the assets and weasel out of the liabilities. It isn't going to work that way.
    3 Aug 2012, 09:23 AM Reply Like
  • bigTTT
    , contributor
    Comments (258) | Send Message
     
    I don't agree Tom. Nobody in their right mind would buy Countrywide knowing of the mess they and others in the business had. Remember, it wasn't only Countrywide. I purchased foreclosures from other major banks as well with worthless loans. In the end, everyone and their brother was writing bad loans. Remember, the market at the time was appraising everything way over value. That was also a major part of the problem. Houses worth $400,000 in value where selling for $825,000. Now they are back down. Nobody really knew how crooked it was until it was to late. Not even me, and I lived thru the 73 housing recession. The major problem was Countywide and others were giving bad loans to anyone! Just as you said. Right at the very end. Other crooks were hiring people off the street, to write bad worthless loans. These people should be in jail. Are they? No, they aren't to my knowledge. BAC is the whipping boy, being it purchased Countrywide. At the time I thought it was a good deal also. I thought they had safeguards in place like all loan companies usually do. Many people need to be in Jail! BAC is trying their best to minimize the problem for all the crooks that did the damage. Remember, BAC didn't have that many bad loans on 'their', books. That's my take on it. Now everyone, (including the crooks), are saying, "BAC bought Countrywide and they can pay for EVERYONES SINS, that's not right.
    4 Aug 2012, 07:13 AM Reply Like
  • Tom Armistead
    , contributor
    Comments (5410) | Send Message
     
    Everybody was doing it, nobody knew, etc. When the gold rush is on, moral restraints and prudential considerations go out the window. Then when it's over, the retroactive application of rules, regulations, restrictions and requirements that were temporarily suspended is painful. How can you punish anyone when everyone was doing it and nobody is to blame?
    4 Aug 2012, 07:27 AM Reply Like
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