Reality Check for Bank Investors, Mortgage Investors and Home Buyers
Reggie Middleton submits: Last week I posted a Bloomberg news article supporting my suspicions that investors are putting bad loans back to the banks at an increasing rate. I used JP Morgan ( JPM ) as a specific example – Banks Swallow Another $30 billion or So in More Losses as Their Share Prices Surge (Again). A few commenters on syndicated sites appeared to have really underestimated the significance of this development. In the article, it is alleged that Freddie ( FRE ) and Fannie ( FNM ) are forcing banks to eat up to $30 billion in soured mortgages under the warranties and representations clauses of the sales contract. To highlight the significance of this development, let me remind all that Fannie and Freddie are benchmarks for mortgage lending in the US. Complete Story ยป…(read more)
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