U.S. housing regulators seek over $6 billion from BofA: FT

(Reuters) - U.S. housing regulators are looking to fine Bank of America more than $6 billion for its role in misleading mortgage agencies during the housing boom, compared with the $4 billion to be paid by JPMorgan Chase & Co, the Financial Times reported on its website, citing people familiar with the matter.

The FT said the Federal Housing Finance Agency (FHFA), pursuing claims on behalf of finance agencies Fannie Mae and Freddie Mac that back about half the existing U.S. home loans, are seeking the penalty. (link.reuters.com/muc93v)

FHFA and Bank of America (BofA) could not be reached for comment outside of regular businesshours.

Countrywide Financial Corp, the mortgage lender acquired by BofA in July 2008, has cost the bank more than $40 billion in litigation expenses and other charges linked to its bad subprime mortgages. The bank set aside an additional $300 million for mortgage litigation in the latest quarter.

JPMorgan reached a tentative $4 billion deal with the FHFA on Friday to settle claims that the bank misled government-sponsored mortgage agencies about the quality of mortgages it sold them, according to a person familiar with the matter.

JPMorgan also reached a tentative $13 billion deal with the U.S. Justice Department and other government agencies to settle investigations into bad mortgage loans the bank sold to investors before the financial crisis, a source familiar with the talks told Reuters on Saturday.

Via: Reuters

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US taxpayers bail out California homeowners, as banks fail to pay their share

Contrary to what voters were led to believe, California took the unprecedented step this month to give banks and struggling homeowners up to $100,000 in taxpayer funds to reduce underwater mortgages.

Originally, banks and lenders were supposed to pay 50 percent of the cost of reducing the principal for those whose homes are worth less than their mortgage. But when the banks refused, California took the controversial step of paying the entire amount, up to $100,000.

"We thought, you know, 50-50 was much more attractive and we'd have much more traction with lenders, and it just didn't turn out to work as well as we would have liked," said Diane Richardson, legislative director of the California Housing Finance Agency.

The program, known as the Hardest Hit Housing Market fund, is part of a $7.6 billion federal effort to help underwater homeowners in 18 states. California received $2 billion. But when banks and lenders who service loans refused to write down even a small portion of the negative equity loans, California decided to use the taxpayer money to pay 100 percent of the mortgage reduction.

Richard Green, a professor of real estate at the University of Southern California, said it's not what taxpayers signed up for.

"I think taxpayers would be furious at the idea that everybody gets completely off the hook for this," Green said. "There are people that say, look, I've been a renter all these years, I've been paying my mortgage all these years, why am I bailing out these people who made a bad decision? I think the politics of it are very combustible."

Via: Fox News

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