Subprime Loan Investors Gain In Effort To Force Major Banks To Buy Back Crappy Mortgages

Reuters reports:

• U.S. mortgage bond investors have quietly banded together to gain the long-sought power needed to challenge loan servicers over losses the investors claim resulted from violations in securities contracts. A group holding a third of the $1.5 trillion mortgage bond market has topped the key 25 percent threshold for voting rights on 2,300 "private-label" mortgage bonds, said Talcott Franklin, a Dallas-based lawyer who is shepherding the effort.

• Reaching that threshold gives holders the means to identify misrepresentations in loans, and possibly force repurchases by banks, Franklin said. Banks are already grappling with repurchase demands from Fannie Mae and Freddie Mac, the U.S.-backed mortgage finance giants.

For more, see Mortgage bond holders get legal edge; buybacks seen.