Bank of America has been in the news for quite some time now. They were accused of selling mortgages to people who did not actually qualify. The government sponsored entities, Fannie Mae and Freddie Mac, want BofA to buy back all of the mortgages. This has been a debate for a while and it hasn't made much progress. A settlement would be good news for shareholders as it would alleviate some of the pressure from BofA's stocks. The GSE's have been more strict regarding the bank's policies for mortgages now since the bank accounts for 58% of the GSE's total mortgage repurchase requests. Our sources say that the bank and the GSE's talks have become more productive in the past few weeks and are closing in on an agreement.
Earlier this week a proposal to reduce the mortgages of underwater homes in the U.S. was rejected. FHFA denied the request to allow the GSE's to lower the principal on mortgages where homeowners owe more than the house is actually worth.
Friday, August 3, 2012
BofA and GSE's Ongoing Battle
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