This is freaking huge.

So now, all loans are either under Freddie/Ginnie guidelines or self-financed?

I take the article to mean that Fannie Mae is refusing to buy mortgages from BOA,
in light of how many shitty loans BOA stuck them with previously.

I took it the same way you did - severed ties, regardless of whose PR arm gets to the WSJ/Bloomberg/NYT editorial desk first with their version of the story.

This basically leaves BAC with Jumbo placement on conventionals, Freddie (with their more limited guidelines) or the FHA/VA, which are so restricted as to be a PITA (and much less profitable) to originate.

This pissing match is going to be a huge 'un, IMO.

But they can't be broken up because they are too many $10s of billions underwater.

If enough originators stop selling them new mortgages, their Ponzi-like nature will be revealed. If they have to simply run off their book of business, they will eventually be revealed as bankrupt.

And when do we grow up and accept the truth? Consertatives always talk about their grandchildren...how can they make it? Yet, they have no problem if the population becomes unreasonable. And they legislate law that would promote population growth.

I'm not attacking your post. I'm just trying to reconcile what they say and what they do.

If Freddie and Fannie are dragging ass, let's talk about their demise. What would be the damage if they were gone tomorrow? Why didn't the GOP drag this through every debate?

The questions are not meant to be hostile. I have to say this because people misunderstand my posts at times.

BOA makes loans that do not conform to "proper underwriting standards ", IE liar loans. Then they sell them to Fannie and Freddie(taking their cut and fees as middle man).

Then the market goes south, and people figure out that BOA made bad loans and didn't follow the rules. So Fannie wants to be reimbursed for the loans, BOA throws a pissy fit over the idea of having to make good the bad loans that BOA originated.

That is the platform from which you issue forth to attack Fannie and Freddie?

Bank of America, once the nation’s largest bank by assets, has been steadily shrinking its balance sheet, and now ranks second to JPMorgan Chase. Many of its problems stem from the disastrous 2008 decision to buy Countrywide Financial, a subprime mortgage lender that caused Bank of America to record more than $30 billion in losses.

Investors are concerned that Fannie and Freddie, along with private investors, will force Bank of America and other giant mortgage lenders to repurchase tens of billions in mortgages that later defaulted, arguing they were not made with adequate documentation or proof of income, or otherwise failed to conform to proper underwriting standards.

---
Countrywide should have failed. Angelo Mozillo and friends should have gone to jail.

never to "do it" again. (It and do both being subjective terms, of course).

Another issue was picking up Merrill. Now they have moved all of Merrill's derivative toxicity onto the balance sheet in order to cover it as a "bank". When that time bomb goes off, look out below.

I think they were made an offer they couldn't refuse.

Ken Lay was creaming his jeans to get his hands on Countrywide and their counterfeit currency presses.

But I think there was great effort to "shore up" Countrywide, make its little problems "disappear" into the colossus of BoA, and enough sugar for the banksters to make it go down smooth.

But the little problems continued to grow, and the sugar turned sour, and now the BFEE isn't behind BoA anymore...

As for Merrill, they were top-drawer sleazy, like a really bad escort service.

And Ken Lay was a genius at crime.

I hope they all get what they have so justly earned...which is a truckload of retribution. But we are going to need a different administration for that.

Must have been something in the water in Charlotte.

Countrywide was Fannie's biggest loan source during the housing boom, providing it with some $1 trillion in mortgages, analysts say. Former Chief Executives Angelo R. Mozilo of Countrywide and Franklin Delano Raines of Fannie Mae at one point even signed a “strategic alliance.”

That pact is ancient history. Paul Muolo, editor of National Mortgage News, said rumors had swirled last fall that Fannie would sever dealings with BofA, complaining that its customer service on troubled loans “stinks” and its processes to qualify borrowers for loans had been inadequate until the middle of 2011.

http://www.latimes.com/business/money/fi-mo-bofa-fannie-mae-20120223,0,4401244.story

When NCNB/NationsBank took over / "merged" with BofA, they and CW controlled the great majority of CA mortgages. The NC bankers seemed to prefer owning the whole mess and having some control than with having CW going down and taking them and their other types of banking with them.

Now ML was forced on BofA and the books were cooked by ML that were used for the due diligence. See my DU2 journal archives.

The FDIC (and hence the Treasury, since the FDIC would have had far too few reserves) would have taken over and closed down CW, Golden West, WaMu, and the other failing West Coast thrifts.

They would have been nationalized, just like Fannie and Freddie have been nationalized.

NCNB became NationsBank because of the S&L crisis along with the depression in the oil patch taking down some high flying Texas banks and bankers. They are still mad.

NCNB worked its way through that housing glut with federal help and made a lot of money along the way.

This time, the smarts and quants had incredibly leveraged the mortgages, home equity credit lines, etc. and collateralized the whole mess and sold them as new investments in mutual funds, 401k's, pensions, etc. huge multiplier effect.

This snippet of news is the first thing to make me giggle hysterically all week...a little too hysterically, IMO.

like it?

B of A is so classy

stop selling Fannie Mae fraudulent mortgages and they won't make you buy them back.

... if we just just wind down Fannie and Freddy (they were not the main cause of the housing bubble but they were definitely part of the problem, and the idea of a public/private corp cannot work ever) we'll be getting somewhere.

Nationalize the Banks
By Matthew Rothschild, March 2009 Issue

One Treasury official after another is doing somersaults on a wire to distract us from the obvious: We need to nationalize many of the banks, not save them as private entities.

The banks got us into this financial mess in the first place by making unwise home loans and by speculating in unregulated credit-default swaps tied to those loans. They have taken the entire world economy down with them. They don’t deserve to be bailed out.

< snip >

And it would have been cheaper to buy them outright.

“The day we gave Citigroup their second infusion we could have bought them for the same $20 billion,” says economist Dean Baker. “On top of that, we guaranteed $300 billion of assets. We could have bought Citigroup several times over.”

Much more here: http://www.progressive.org/mag/wx021109.html