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US housing agency sues banks for mortgage abuses
Business Digest: Conservator for Fannie Mae and Freddie Mac chases financial institutions to recover $30bn losses
The Federal Housing Finance Agency (FHFA), which is conservator for US mortgage giants Fannie Mae and Freddie Mac, is to sue more than a dozen large banks for failing to properly assess the quality of mortgage securities they were selling in the lead-up to the 2008 financial crisis.
Bank of America, JPMorgan Chase, Goldman Sachs and Deutsche Bank are all expected to be targeted by the suit. The case will reportedly be on a similar scale to that which the FHFA brought against UBS in July to recover at least $900m in losses.
Fannie Mae and Freddie Mac lost more than $30bn when securities based on subprime mortgages went bad following a several-year-long housing boom. Most of these losses were borne by the American taxpayer.
On top of this case, there are several others aimed at recovering losses from banks on similar grounds. In one case, 50 state attorney generals are negotiating a settlement of at least $20bn with large mortgage providers such as Bank of America, JPMorgan and Citigroup.
Read a full report at the New York Times. ·
