Thursday, October 21, 2010

FHFA hires law firm, may go after mortgage repurchases

A spokesperson for the New York law firm Quinn, Emanuel Urquhart & Sullivan confirmed to HousingWire it has been hired by the Federal Housing Finance Agency, a move some say means the government-sponsored enterprises are going after bad mortgages it bought from originators.
On the other side of that, major banks are struggling to get an accurate estimate on how much agency and private-label MBS investors are going to target on these repurchases and warranties.
According to Barclays Capital, that number could be as high as $85 billion. Bank of America (BAC: 11.36 -3.32%) set aside $872 million to cover those potential losses in the third quarter, but it has fluctuated between half that three months ago and 30% more a year ago.
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