Bank of America Papers Show Conflict and Trickery in Mortgages
By MICHAEL CORKERY and BEN PROTESS, NYT
August 21, 2014 9:29 pm
A founder of Countrywide Financial warned three years before the housing market collapsed that his company could face “financial and reputational catastrophe” if it continued holding certain risky mortgages on its balance sheet. Still, Countrywide continued to sell these loans to investors.
Bank of America refinanced a $156,491 Countrywide loan for a 24-year-old mobile home into a government-backed mortgage. The borrower, who also managed to roll credit-card debt into the loan, was behind on his payments at the time of the refinancing.
And a Merrill Lynch consultant vented in an internal email that the Wall Street firm seemed unfazed by issues with mortgage standards. “Makes you wonder why we have due diligence performed other than making sure the loan closed.”
Documents released as part of the $16.65 billion settlement between Bank of America and the Justice Department read like a highlight reel of the mortgage sins that fed the 2008 financial crisis. As part of the deal, the bank and the Justice Department agreed to a “statement of facts” that offers a window into some of the darkest corners of the Countrywide and Merrill mortgage machine that was responsible for funneling a stream of troubled loans that helped devastate the global financial system.
(More here.)
August 21, 2014 9:29 pm
A founder of Countrywide Financial warned three years before the housing market collapsed that his company could face “financial and reputational catastrophe” if it continued holding certain risky mortgages on its balance sheet. Still, Countrywide continued to sell these loans to investors.
Bank of America refinanced a $156,491 Countrywide loan for a 24-year-old mobile home into a government-backed mortgage. The borrower, who also managed to roll credit-card debt into the loan, was behind on his payments at the time of the refinancing.
And a Merrill Lynch consultant vented in an internal email that the Wall Street firm seemed unfazed by issues with mortgage standards. “Makes you wonder why we have due diligence performed other than making sure the loan closed.”
Documents released as part of the $16.65 billion settlement between Bank of America and the Justice Department read like a highlight reel of the mortgage sins that fed the 2008 financial crisis. As part of the deal, the bank and the Justice Department agreed to a “statement of facts” that offers a window into some of the darkest corners of the Countrywide and Merrill mortgage machine that was responsible for funneling a stream of troubled loans that helped devastate the global financial system.
(More here.)
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