Bank of America Corp., JPMorgan Chase & Co. and Wells Fargo & Co. are among mortgage servicers that may face $13.5 billion in costs if the Federal Housing Administration rejects insurance claims on soured loans, according to FBR Capital Markets Corp, Bloomberg reports.
Denials from the FHA, which insures loans made by banks and private lenders for home purchases, could be the latest expense from U.S. housing programs, Paul Miller, an FBR analyst, said today in a note to clients. The government said in May that it could pursue other lenders after suing Deutsche Bank AG for more than $1 billion, accusing the firm of lying to the FHA while arranging mortgage insurance.
“The servicing of FHA loans comes with highly technical regulatory mandated procedures,” Miller said in the note. “The agency’s narrowly proscribed requirements make it more likely for the servicers, not the originators, to be tripped up. If the agency is looking for a way to deny a claim, the servicing process is an easy target.”
Lenders and servicers have faced surging costs as U.S.- owned Fannie Mae and Freddie Mac demanded that banks repurchase defective loans and the U.S. sued 17 firms to recoup losses on mortgage-backed securities. Bank of America has plunged 59 percent in New York this year, falling below $6 today for the first time since 2009. JPMorgan and Wells Fargo have dropped 32 percent and 25 percent, respectively....
Find out more at http://www.bloomberg.com/news/2011-10-03/bofa-jpmorgan-face-13-5-billion-in-fha-claim-costs-fbr-says.html
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