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Saturday, September 17 2011 - By Autumnn Darden
Bank of America is one of many U.S. lenders suffering major losses from mortgage lawsuits.
Controversial lending practices associated with mortgages and foreclosures have cost the nation's five largest home loan lenders $65.7 billion in lawsuit damages. The largest U.S. financial institution, Bank of America, has been hit the hardest, with a total of $39.1 billion in settlements since the start of 2007. Despite predictions from bankers and analysts that estimated the lenders would suffer only modest losses from the lawsuits, U.S. regulators argue the mortgage crisis was the result of more than a few oversights and are expecting large sums in damages from the lenders. "You're not talking about improperly stapling together two documents, you're talking about systematic fraud in the system," said Neil Barofsky, former special inspector general for the Troubled Asset Relief Program, Bloomberg reported. "What this shows is that before the financial crisis, the banks were essentially lying to the purchasers of the mortgages about the quality." As the losses continue to grow for many lenders, Bank of America recently announced it has considered putting the Countrywide Financial unit of the bank into bankruptcy if the mortgage lawsuit damages threaten to permanently harm the parent company, the news source reported. CEO of Bank of America Brian Moynihan has lost $30 billion of the bank's assets to the faulty loans sold by Countrywide, and experts predict that total could double in the next few years. Mike Mayo, analyst at Credit Agricole Securities USA, told the news source that putting Countrywide into bankruptcy could be used as leverage against plaintiffs seeking refunds for their sour mortgages. More News |
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