– The Federal Reserve Bank of New York as well as several giant investment companies including Pinco and Blackrock are demanding that the Bank of America to buy back some of the bad credit mortgage. The total for such amounts to an estimate of $2 trillion or mortgage secruities from the year 2004-2008. This so-called request came upon after the Federal Reserve bought billion of dollars in mortgage securities as part of the financial bailout.
Though the human aspect of this bad credit mortgage story is the one headlining the news, the question on how these bad credit loans came about is the most important thing right now but finding the answer for this may take a while. This delay is causing a huge battle between mortgage holders like the government, hedge funds and other institutional investors.
Glen Schorr, an analyst for Nomura Securities remarked this situation is very serious stating that “the numbers are all over the map”. Other investors like Citigroup and JP Morgan Chase are repurchasing bad credit mortgages now on the hopes that it will be bought back. Other hedge funds like York Capital and Moore Capital are also jumping in the bandwagon in repurchasing bad credit mortgages.
Another analyst from http://flequityfinance.com remarked on this event saying that “The idea of bottom-fishing vulture funds buying this stuff up for a nickel on the dollar so they can sue the banks to get 100 cents must be pretty odious for the Treasury, which bailed out the banks in the first place.” This issue of buying bad credit mortgage could also place the government in risk even if the Federal Reserve is supposed to handle this department. If the banks and financial institutions are forced to spend tens of billion to buy back securities then they could turn to the federal government for support something that happened to Bank of America.
Leave a Reply
You must be logged in to post a comment.