Mortgage Lender Files 12+ Federal Suits Against Loan Originators For Sticking It With Crappy Loans; Finger-Pointing To Get Ugly, Say Some Experts

In Minnesota, the Minneapolis Star Tribune reports:

• A division of ResCap, the embattled mortgage-finance arm of GMAC Financial Services, is fighting back in the home-lending credit crisis. The Bloomington-based investor has filed more than a dozen federal lawsuits in Minnesota against mortgage companies, claiming that they failed to do adequate due diligence on borrowers and provided inaccurate information about the financial wherewithal of loan applicants.(1)

• ResCap, through its Residential Funding Co. unit, is seeking millions of dollars for nonperforming loans that it financed from mortgage brokers around the nation. Securities and real estate experts expect more lawsuits to come as the finger-pointing among lenders, brokers and investors gets ugly.

For more, see ResCap suing brokers who originated bad mortgage loans (The Bloomington-based warehouse lender alleges that defendants misrepresented data on borrowers and should buy back the troubled loans).

(1) According to the story: (a) ResCap alleges in its lawsuits that individual mortgage and finance companies made misrepresentations concerning borrowers' employment, income, occupancy and other "undisclosed liabilities;" and (b) ResCap asserts that the mortgage originators are contractually obligated to buy back those troubled loans because they had been sold to ResCap on the belief that they were of "investment quality, had been prudently originated and had been properly underwritten."