Categorized | Finance and Mortgage

SEC Investigating Troubled Mortgage Loans Issued by Banks

Please Share!

Various banks, including the Royal Bank of Scotland and Credit Suisse, are facing investigations by the Securities and Exchange Commission. The SEC has targeted these banks, as there is a possibility that they were very deceptive in the how they handled and reported their mortgage loan portfolio.

According to various reports regarding the investigation, the SEC believes that both the Royal Bank of Scotland, and Credit Suisse failed to fully disclose the amount of loans that suffered from early defaults. The banks are required to buy back such loans, thus negatively affecting the bottom lines of shareholders.

The SEC also believes that Credit Suisse committed fraud in using mortgage loans that failed to meet standards to back the securities that they had been selling. If the banks had knowledge that these loans used to back securities were fraudulent, they would be held liable and at the whim of heavy consequences.

Beyond the deceptive tactics used to boost the portfolios of the banks, the use of fraudulent loans to back securities also allows banks to gain greater profits by collecting origination fees twice.

The Royal Bank of Scotland and Credit Suisse are not the only two banks facing probes and investigations by the Securities and Exchange Commission. Many other major banks, including JPMorgan Chase, Bank of America, Goldman Sachs, and Deutsche Bank, are under serious investigations by the agency and the attorney general. These banks are facing investigation for matters very similar to those being carefully examined regarding the practices of the Royal Bank of Scotland and Credit Suisse.

Please Share!

About Drew Wilson

Drew focuses on the Commercial and Mortgage/Finance categories.

Leave a Reply

Twitter Chat