There is current and updated US Treasury News . The prospect of banks being forced to buy back mortgage securities due to faulty foreclosure documents poses no systemic financial risk, says the US treasury. However, the foreclosure controversy, can lead to the delay in the sale of hundreds of controversial properties thereby bringing down home prices. The Treasury is closely monitoring litigation risks, but as of now foresees no systemic threat whatsoever.
A joint investigation into faulty affidavits by mortgage servicers has been launched by all 50 states in the country. The controversy has triggered a new wave of problems for lenders. With this problem, there hovers a dark cloud over the long-delayed recovery of the U.S. housing market. Damon Silvers, member of the Congressional Oversight Panel, objects to the Treasury’s kind view of the impending threat. Silvers cites a demand by eight large investors that Bank of America take back some $47 billion in mortgage bonds because of faulty affidavits backing the mortgages. If Bank of America accepts the demand then it will have to put up with an estimated loss of around $23 million.
According to US Treasury News, Bank of America Chief Executive Brian Moynihan says that he intends to fight litigation from investors who want to offload mortgage bond that are performing badly. Meanwhile, a US bank regulator, the Office of the Comptroller of the Currency, promised to ensure that banks adequately assess the risks of lawsuits over the controversy and have sufficient reserves to meet the losses.