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Thread: Four Major Banks Could Be Hit with $180B in GSE Loan Buybacks

  1. #1

    Four Major Banks Could Be Hit with $180B in GSE Loan Buybacks

    About 50 percent of the loans held by Fannie Mae and Freddie Mac come from the nation’s four largest banks – Bank of America, JPMorgan Chase, Wells Fargo, and Citi.

    Lately, the GSEs have become more aggressive in forcing originators to buy back bad loans. Based on Fannie and Freddie’s current “distressed” numbers (a combined $354 billion in delinquent mortgages and REOs), Fitch Ratings estimates that the big four could be on the hook to repurchase as much as $180 billion in nonperforming assets. This, of course, would be the worst-case scenario.

    The ratings agency said, “Fitch anticipates that a focal point of repurchase requests will be reduced documentation loans (sometimes known as Alt-A loans). The actual amount of repurchase requests will ultimately depend on key variables such as quality of the originator’s underwriting, documentation standards, and foreclosure rates.”

    In Fitch’s worst-case scenario, the buybacks could result in a combined loss for the nation’s top four lenders of between $17 billion and $42 billion. The agency notes, though, that realized losses could be lowered, dependent on the banks’ ability to cure loan deficiencies.


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  3. #2
    good. but many of these loans were originated through independent brokers and mortgage bankers and they (the banks) will go after these businesses to pass the buck. ultimately it's wall street that should pay.

    btw, there are all kinds of rules and regs being pushed for by big banks that give smaller brokers less ability to be competitive. they are slowly directing all business to the top lenders and squeezing out the small guy. after this refi boom is over there may only be big banks and the banking cartel left standing.

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