Categorized | Commercial

Bank of America Corp. May Need to Pay Billions for Faulty Mortgages

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The news definitely isn’t getting any better for Bank of America Corp. They are currently facing a lawsuit from insurer MBIA Inc. regarding faulty mortgages.

Experts that have been following the lawsuit believe that Bank of America may be looking at nearly ten billion dollars in liability if the judge for the case sides with MBIA Inc. MBIA Inc. would like Bank of America to buy back all the loans, including those for which any errors did not actually cause a default by the borrower.

Fortunately for Bank of America, any potential ruling will not come until October, thus giving the banking giant at least some time to evaluate how they will handle a worst case scenario. However, the situation does not look good, as Bank of America is already facing increased losses for other faulty mortgage loans that they administered.

Bank of America has adamantly spoken out against the lawsuit, as they feel that their role in the faulty mortgages has been overstated and overemphasized throughout the entire process. Spokesmen from the company insist that the losses and defaults have been more of a result of external factors than of the faulty information used when processing the loans. They are citing such factors as depreciation in home prices, and high unemployment rates as being the major cause for defaults.

Some analysts believe that a settlement will be reached in the case. The settlement would involve Bank of America repurchasing forty percent of the faulty loans, costing the company as much as eleven billion dollars.

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About Drew Wilson

Drew focuses on the Commercial and Mortgage/Finance categories.

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