In light of recent lawsuits, big banks have had to face the music and pay up regarding their behavior in certain mortgage lending practices. Most of the lawsuits have come after struggling homeowners jumped through hoops to save their homes, only to find out that lenders weren’t holding up their end of the deal. Many lenders have been found guilty of selling off subprime mortgages to investors, which also other fraudulent actions such as inflating appraisals and the flat out denial of loan modifications of qualified borrowers.
Time For Restitution
Bank of America Corp. settled on a $315 million payout to end mortgage securities lawsuits against its Merrill Lynch unit. The settlement is part of a 2008 lawsuit against Merrill Lynch for “false and misleading” statements about the $85 billion in securities profits. The main complaint from plaintiffs regarded inaccurate statements about qualification standards for mortgage loan applicants and loan modification requests.
The agreement is said to be the first in a long line of settlements expected from lenders, underwriters and mortgage guarantors. Wells Fargo & Co. also reached a deal earlier this year for a settlement of $125 billion for their actions.