Of Special Interest

Filters

[x] [x]

14th September 2012

US banks face major 'put back' charges

Freddie Mac has added $3.4bn to its 'put backs', the impaired loans on its books which it bought under what it considers to be false information from the originator.


In itself this would not be of major significance however it is the latest part of a $19bn total of such bad loans that the two federal housing agencies have put back to the banks in the last six months with more to come. Both Freddie Mac and the much larger Fannie Mae have been heavily criticised by congress, senate and regulators for not taking decisive action much earlier. With this guidance, the regulator of the two, the Federal Housing Finance Agency is pushing hard for the agencies to put back more of the bad loans. The two agencies currently have around one-half of all US residential mortgages. The amount of put backs is therefore likely to be high also. Bank of America is already facing requests for $11bn from the two agencies.