BoA: Buy back the junk!
SAN FRANCISCO (MarketWatch) -- A bondholders' group is seeking to force Bank of America Corp. (BAC 11.99, 0.35, 2.84%) to buy back some $47 billion in bad mortgages packaged by Countrywide Financial Corp., according to a published report Tuesday. Bloomberg News, citing unnamed people familiar with the matter, reported that Pacific Investment Management Co., BlackRock Inc. (BLK 174.23, 2.27, 1.29%) , and the Federal Reserve Bank of New York wrote to Bank of America and Bank of New York Mellon Corp., the debt's trustee, (BK 26.15, 0.47, 1.75%) faulting Countrywide for not servicing the loans properly
BANK OF AMERICA, the bondholders are not happy with you!
From one of the commentators:
FIRST THE GSEs, NOW THE MONOLINES....
"For your reading pleasure, here's the letter that was sent in early September to Bank of America CEO Brian Moynihan from the Association of Financial Guaranty Insurers (the monolines) arguing why they believe his bank will owe their members $10-20 billion for mortgage repurchases....."
You can read the letter to B oA here:
http://www.scribd.com/...
FROM REUTERS:
Mortgage investors put pressure on Bank of America
11:34am MDT
By Al Yoon
NEW YORK | Tue Oct 19, 2010 2:39pm EDT
(Reuters) - A group of investors holding $16.5 billion of mortgage bonds took a step toward a possible suit against a Bank of America Corp unit for failing to correctly handle loans that were packaged into bonds.
Well, the following is what the diary originally was, and then the BoA story jumped up while I was getting ready to hit publish.
Couldn't wait to share the story .
All that remains of the originate-to-sell assembly line are the insolvent housing GSEs -- Fannie Mae, Freddie Mac and the FHA -- and the three largest zombie money center banks, all who together have a tripartite monopoly on loans sales to the GSEs. As we've noted, the U.S. mortgage lending industry is making loans, but only conforming, premium mortgages with 4-5 points in fees and credit penalties to discourage refinancing. Whereas during the boom mortgages came to market as a discount to par, today a premium is more the rule due to the extra fees.
One of the dirty little secrets we've discussed previously is that the GSEs and large zombie banks deliberately are using loan pricing to discourage refinancing (and thereby prevent prepayment of relatively high yielding loans from their portfolios). But the same group of big banks and GSEs also is playing ring-a-round-the-rosy with loan repurchase claims to window dress their respective solvency, creating a virtuous circle of accounting fraud and public obfuscation that confirms the worst fears of opponents of the authoritarian corporate state.
I think you all need to read Pluto's recent suggestions on how to ride out the storm:
The United States of Austerity - A Survival Guide
by Pluto
Sat Oct 16, 2010 at 04:28:41 PM PDT
Here's where we were yesterday. It just got worse:
US growth evaporates quarter after quarter and turns negative again from the end of 2010;
Unemployment hasn’t stopped growing and in six months, more than two million Americans have left the workplace. (International observers believe that the real US unemployment figure is now at least 20%);
The U.S. housing market remains depressed at historically low levels and will resume its fall from the fourth quarter 2010;
Last but not least, the US consumer is and will be absent on a permanent basis since his insolvency continues and even gets worse for the nearly one American in five without work.