Bank of America discounts claims of mortgage repurchases
Bank of America (BOA) is not budging in its position that it has not improperly handled
nor wrongfully facilitated defaulted loans and is rejecting any demand for mortgage repurchases.
Freddie, Pimco Investment Management, Blackrock Financial Management as well as the Federal Reserve Bank of New York have all complained that Bank of America should buy back bad loans which, they claim, are tainted with irregularities in paperwork. The Feds are necessarily involved since it suffered the weight of delinquent loans when it took over the assets of the American International Group, Inc.
The Bank of America lawyers had also categorically denied any claim that it mishandled loan modification applications and violated the terms of its mortgage-backed securities investments. The bank holds at least $47 billion in securities, but there is uncertain how much of these are in default.
The investors are asserting that modifying loans with faulty documents and non-adherence to underwriting standards violated the contractual obligations of the bank.
Countrywide stressed that by continuing to service bad loans instead of proceeding to foreclosures unduly hiked up the expenses and only benefited the bank at the expense of its investors.
But the Bank of America insists that their practices reflect industry standards and procedures and that the loan modifications were done in the interests of borrowers in tune with the government policy.
Moreover, it asserts that the allegations of irregularities and claims of mishandling loans are without basis.
BOA also said that contrary to what it is saying now, Freddie Mac had consistently relayed its commitment to them in providing adequate relief for homeowners to avoid foreclosures. Hence, BOA finds Freddie's demand to expedite foreclosures somewhat inconsistent with its expressed commitment.
Investors are worried that the demands for mortgage repurchases could put a weight on the already troubled institutions in the coming months.
But the Bank of America shares had shown a 2 percent gain of 24 cents last Friday.
Bank of America discounts claims of mortgage repurchases