Government of USA files billion-cost cases against major banks for perversion of information on mortgage securities

/IRBIS, September 2, 2011/ - The Federal Agency funding the U.S. housing (FHFA) intends to file lawsuits against more than a dozen major banks in the country on charges of misrepresentation about the quality of mortgage-backed securities that they manufacture and sell at the peak of a "bubble" in the property market, reported The New York Times September 1 citing to three unnamed sources familiar with the matter. The defendant in their claims will require billions of dollars in compensation. As indicated, FHFA, as expected, will submit claims in the coming days in federal court, especially against Bank of America, JPMorgan Chase, Goldman Sachs and Deutsche Bank. As pointed out by the sources, if not the lawsuits will not be filed this Friday, then most likely it will happen on Tuesday. In the claims it will be approved that banks that issue and place mortgage securities, did not conduct a proper evaluation, which is required under securities law, and did not pay attention to the fact that the income of borrowers have been overstated or falsified. As a result, when many borrowers unable to pay its obligations under the mortgage loans, securities, mortgage-backed, rapidly lost value. Mortgage agencies Fannie and Freddie have lost more than $ 30 billion, partly as a result of such transactions, and losses were suffered by primarily the taxpayers. In July, FHFA has filed a lawsuit against UBS, another major contractor mortgage securitization, seeking to recover at least $ 900 million, sources told that the new trial would be similar in scale. Private holders of mortgage-backed securities are already trying to force big banks to redeem their securities by tens of billions, but the efforts of federal agencies will open a new chapter in a huge legal battle, which has alarmed investors, who invest in bank shares. In this case, FHFA does not require the repurchase of mortgage bonds, and seeks compensation for losses on securities of Fannie and Freddie. In addition, 50 state attorneys general are in the final stages of talks to resolve the issue of abuse by the largest banks serving the mortgage market, including Bank of America, JPMorgan and Citigroup. Attorneys general argue that banks have to pay at least $ 20 billion Last month, insurance giant American International Group has filed a lawsuit of $ 10 billion vs. Bank of America, accusing the bank and its branches Countrywide Financial and Merrill Lynch in the distortion of assessing the quality of mortgage loans that have been providing securities. As noted, Bank of America, Goldman Sachs and JPMorgan declined to comment. Frank Kelly, a spokesman for Deutsche Bank, said: "We can not comment on the lawsuit, which we have not seen, and which has not yet been filed." [2011-09-02]