Stiffed Mortgage Investors Look To Force Banks To Buy Back Bad Paper

The Wall Street Journal reports:

• Already burned by bad mortgages on their books, lenders now are feeling rising heat from loans they sold to investors. Unhappy buyers of subprime mortgages, home-equity loans and other real-estate loans are trying to force banks and mortgage companies to repurchase a growing pile of troubled loans. The pressure is the result of provisions in many loan sales that require lenders to take back loans that default unusually fast or contained mistakes or fraud.

***

• Many recent loan disputes involve allegations of bogus appraisals, inflated borrower incomes and other misrepresentations made at the time the loans were originated. Some of the disputes are spilling into the courtroom, and the potential liability is likely to hang over lenders for years.

For more, see Investors Press Lenders on Bad Loans (Buyers Seek to Force Repurchase by Banks; Potential Liability Could Reach Billions) (if full story is unavailable, go here - then click link for the story; you may also have to click the "Refresh" button on the web page to get to the story).