New York Fed May Try to Force Banks to Repurchase Bad Loans
by
Aug 5th 2010 9:24AM
Updated Aug 5th 2010 9:28AM
The Federal Reserve Bank of New York may try to force banks to repurchase past-due home loans that back some of the securities it holds.
The move would boost the value of the institution's Maiden Lane portfolio, which held $67.4 billion in assets in the week ending July 28, Reuters reported.
"Through our ongoing management of the Maiden Lane portfolios we are involved in multiple efforts related to exercising our rights as investors in non-agency RMBS or CDO securities including those that require originators to repurchase ineligible loans," Jack Gutt, a New York Fed spokesman, said in an e-mail to Reuters.
The move by The New York Fed is one of a string of attempts by investors to hold lenders accountable for irresponsible lending.
Investors are banding together to top the 25% threshold that gives them voting rights to force trustees to repurchase.
"Investors have been getting organized, and soon there will be a very large effort to resolve this mortgage problem," said Bill Frey, president of Greenwich Financial.
Fannie Mae and Freddie Mac have also been aggressively pushing repurchase requests. In the first quarter, Freddie Mac forced lenders to repurchase $1.3 billion of loans, and had had almost $5 billion in outstanding demands.
The move would boost the value of the institution's Maiden Lane portfolio, which held $67.4 billion in assets in the week ending July 28, Reuters reported.
"Through our ongoing management of the Maiden Lane portfolios we are involved in multiple efforts related to exercising our rights as investors in non-agency RMBS or CDO securities including those that require originators to repurchase ineligible loans," Jack Gutt, a New York Fed spokesman, said in an e-mail to Reuters.
The move by The New York Fed is one of a string of attempts by investors to hold lenders accountable for irresponsible lending.
Investors are banding together to top the 25% threshold that gives them voting rights to force trustees to repurchase.
"Investors have been getting organized, and soon there will be a very large effort to resolve this mortgage problem," said Bill Frey, president of Greenwich Financial.
Fannie Mae and Freddie Mac have also been aggressively pushing repurchase requests. In the first quarter, Freddie Mac forced lenders to repurchase $1.3 billion of loans, and had had almost $5 billion in outstanding demands.
6 Comments