The United States being paid by Big Banks for Mortgage Mess

The battle between the banks of Wall Street and regulators from Federal Housing Finance
Agency may have just had a huge turn in last month as the latter taking its biggest win over the
Wall Street ever since the financial crisis started.
The Federal Housing Finance Agency is execting to receive a huge sum which could total u
to !" billion from the Wall Street banks. The basis has been their misreresentation of certain
mortgage securities which they sold to Fannie #ae and Freddie #ac$ as reorts in the news
have gone on to inform the ublic.
%&#organ 'hase may be involved in the situation as well.
The amount that the banks will be aying the agency may undermine any collection they have in
the ast since the financial hit back in ())*.
As mentioned by +uy 'ecala$ a ublisher and ',- of .nside #ortgage Finance$ no other
agency has been able to collect such an amount bigger that what FHFA will be accumulating.
The Federal Housing Finance Agency has been making headlines the most and will be getting
the most money as well$ he added.
However$ the Federal Housing Finance Agency declines to give any comment regarding the
involvement of %&#organ.
%&#organ is just one of the many banks that FHFA sued out of the /0 banks and financial
institutions. These are the ones which dealt multile settlement bonds$ secifically Freddie and
Fannie bonds$ which were riskier than it was first thought.
Fannie and Freddie is one of the many housing finance firms which initially came under the
government. The rights to the firm were transferred to the Federal Housing Finance Agency
after taking a hit of !/0* million during the housing market crises back in ())* as a bailout.
Since its ac1uisition by the FHFA$ the firm has gained footing and has now been able to ay
!/2" million in dividends to the treasury deartment.
The government can continue to look forward towards gains as a result to the lawsuits that are
being rocessed against the accused.
34S was already able to ay their settlement of !005 billion as a result of the losses that it had
from the !".6 billion7s worth of mortgage securities. .t has also been noted that Freddie and
Fannie may have lost around !/./5 billion since 8ecember of ()//.
,arlier$ it has also been reorted that FHFA was able to reach a settlement with 'itigrou and
+eneral ,lectric.
-ut of the /0 firms that they are suing$ /5 are yet to settle$ though it may reduce to /6 soon.
HS4'$ a 4ritish lender$ has reorted last August that they may be aying the Federal Housing
Finance Agency as much as !/." billion in damages. They were sued by FHFA for selling
misreresented bonds to Freddie and Fannie worth !".( billion dollars.
%&#organ7s on the other hand went over !22 billion. This already includes the bonds sold by
Washington #utual and 4ear Stearns. 4oth comanies were ac1uired by %&#organ during the
turmoil in the investment bank turmoil which hit the country in the year ())*.
%&#organ even comlained that acceting both banks has been a favor which the government
should be thankful for.
The 4ank of America on the other hand$ which absorbed 'ountrywide and #errill 9ynch$ is
currently going against FHFA for liabilities from both banks which sums u to over !5* billion.
All /0 banks and financial institutions that the FHFA is currently suing may cover almost !())
billion: though FHFA did not comment regarding how much Fannie and Freddie lost due to these
institutions.
The sokeserson for the three large banking institutions mentioned in the article declined to
comment as well.
'ecala is seeing the tides turning to favor FHFA. He also added that %&#organ and the 4ank of
America will be aying a huge sum once the lawsuits are settled.