Federal Government Sues Banks for Mortgage Fraud

The Federal government is trying to recoup the losses that were incurred by the two government sponsored entities that ran hog wild over the past couple of decades. Fannie Mae and Freddie Mac have incurred billions of dollars in toxic assets; assets that the taxpayers have to eat because of an implicit understanding that the federal government guaranteed these fraudulent loans.

A U.S. regulator filed lawsuits Friday against 17 of the nation's largest banks over losses from mortgage-backed securities, aiming to recoup billion of dollars stemming from the failed investments.

The Federal Housing Finance Agency, the federal regulator for Fannie Mae and Freddie Mac, is suing some of others for violating federal and state laws in the sale of mortgage-backed securities.

The FHFA alleged that the loans had different and more risky characteristics than the descriptions contained in the marketing and sales materials provided for those securities.

The agency alleged that the banks and mortgage lenders falsely represented that the mortgage loans in the securities complied with guidelines and standards, and they included representations "that significantly overstated the ability of the borrower to repay their mortgage loans."

The total price tag for the securities bought by Fannie and Freddie is $196 billion. The government didn't provide a dollar amount for damages, but it said it wants to have the purchases of the securities canceled, be compensated for lost principal and interest payments, as well as attorney fees and costs.

And while the feds are at it, why don’t they sue the ratings agencies, National Association of Realtors, every congressman who perpetuated this fraud committed by Fannie and Freddie. As a matter of fact, all those executives who served at these two government sponsored entities should be in jail. But their too damn well connected to the politicos who run this country. As a matter of fact, many of these people have served in presidential administrations.

Source: http://www.wnyc.org/blogs/wnyc-news-blog/2011/sep/02/federal-government-sues-banks-over-mortgage-losses/