Friday, September 2, 2011

Banks may face lawsuit over U.S. mortgages: At last!

A U.S. agency is planning to sue more than a dozen banks, alleging they misrepresented the quality of mortgage securities they packaged and sold to investors before the 2008 financial crisis, the New York Times reports.

The yet-to be filed suit will target Bank of America, Goldman Sachs, JPMorgan Chase, Deutsche Bank and others, the newspaper reported, citing three unnamed sources.

The FHFA, which was created in July 2008, is expected to argue that the banks failed to do due diligence and missed evidence that borrowers' stated income was either inflated or falsified.

The newspaper said the regulator will seek billions of dollars in compensation. more