Bank of America Buys Back Bad Mortgages

By Richard Gibson
Jan 3 2011

Bank of America executives announced today that they would buy back billions in mortgages that were made with faulty information and poor qualifications.

According to the documents filed with the federal court system, Bank of America has agreed to buy back $12.8 billion in bad mortgages that were eventually sold to Freddie Mac and Fannie Mae.

Freddie and Fannie contend that Bank of America intentionally misled them with the mortgage packages that were sold prior to 2008. The mortgages in question were offered to consumers that had little or no income, despite the fact that the documents sent to the governing bodies showed plenty of income.

This is all part of the massive investigation into the mortgage lending market. Investigators believe that companies like Bank of America were so quick to make money from mortgages that they were letting thousands of unqualified or under qualified buyers have massive mortgage loans.

In 2008 the mortgage bubble burst and the banks were revealed. Now the banks are suffering the consequences as federal investigators are finding wrongdoing in many forms all over the financial horizon.

Bank of America plans to make the buy backs in several payments. Today they will transfer some $2 billion to Freddie and Fannie and will split the remaining $10 billion into payments spread out over the course of 2011.

Freddie and Fannie plan to announce a list of other banks that will be required to buy back bad mortgages in the coming year.