Categorized | Commercial

Faulty Mortgages and Foreclosures Lead to Decline in Profits for Major Banks

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The days of earning substantial profits off faulty mortgages are long gone. In fact, the practice that led to the housing crash is now costing major lenders big money, and cutting away at their profits.

In the most recent report, major lenders have lost as much as sixty-six billion dollars as a result of their foreclosure abuses and faulty mortgage practices. That number may double with more civil suits pending.

The costs that have come as a result of the housing crash debacle have hit Bank of America the hardest. Recent reports indicate that the lender is facing tremendous struggles, which can largely be attributed to the thirty-nine billion dollars in costs that it now faces due to its past mortgage loan practices.

Investigations into the practices of the major lenders have found multiple instances of fraud leading up to the approval of faulty mortgage loans. Many of the faulty mortgage loans ended up creating a glut of foreclosures in the housing market. As such, values have plummeted, and there is no clear indication as to when they will improve in most areas.

Experts believe that the actual costs faced by lenders now are miniscule compared to the overall damage that they caused with fraudulent lending practices. It is believed that faulty mortgages and foreclosure abuses have cost the United States trillions of dollars in overall damage.

They claim that investors were sold bad loans that were approved despite clear indications that the homeowners would not have the means to repay them. As such, the banks are now paying for their own fraudulent actions.

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About Josh Johnson

Josh is the main writer for the Residential category. He also helps out on other categories when needed, mainly the International section.

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