Bank of America Re-Buys Bad Mortgages

Bank of America Re-Buys Bad Mortgages

Bank of America officials outlined a plan this morning to start buying bad mortgages from Freddie Mac and Fannie Mae. According to the plan, Bank of America will hand over $2 billion starting today and then offer further payments throughout the rest of 2011 until they have bought back the $12.8 billion in bad loans that the company made and then eventually sold to Freddie and Fannie.

According to the governing bodies, Bank of America offered the loans based on faulty information. Many of the loan recipients were unable to provide proof of qualifying income and were well over their heads when it comes to the mortgage payments that would be required each month.

As such the governing bodies said that Bank of America intentionally misled them with faulty information. This means that the mortgage companies bought billions in loans from the bank without the required information which eventually lead to the decline in the housing market during the economic recession.

Now that Bank of America has made their resolution public, the government regulators have their sights set on other banks that followed the same protocol. According to the latest report, there are nearly $50 billion in bad mortgages that were offered prior to 2008 that should have never been approved for the lenders.

Bank of America said that they would buy the loans but they are not admitting that they did anything wrong in the process of offering the loans to their customers.