@Jay Hinrichs this is from the 2010 NYT article, which is behind a paywall:
https://www.nytimes.com/2010/08/20/business/20norris.html
"Already the four big commercial banks JPMorgan Chase, Bank of America, Wells Fargo and Citigroup have taken losses of $9.8 billion on loans they have repurchased or expect to be forced to repurchase. Moshe Orenbuch, an analyst at Credit Suisse, says he thinks that figure will rise to $20 billion or $30 billion before the wave is over. Other analysts think the number could be significantly higher.
Even now, long after we learned just how bad the underwriting standards were, it is surprising to see how bad many of these loans were. In the second quarter, Wells Fargo repurchased $530 million of mortgage loans. It concluded those loans were worth, on average, a little less than half their face value.
Wells says it has the right to recover some of that from the companies that sold it the loans. Unfortunately, “due primarily to the financial difficulties of some correspondent lenders, we typically recover on average approximately 50 percent from these lenders,” Wells added in a filing with the Securities and Exchange Commission.
So far, most of the money the banks have paid has gone to Fannie Mae and Freddie Mac, which used to be government-sponsored enterprises and now, after the bailouts, are government-controlled. But even though they have collected billions, Fannie and Freddie are getting increasingly frustrated with the banks for what they see as foot-dragging.
Freddie, in its quarterly report filed this month, said it was now requiring banks “to commit to plans for completing repurchases, with financial consequences or with stated remedies for noncompliance, as part of the annual renewals of our contracts with them.”
So please correct me if I'm wrong or illuminate on this: The major banks, with shoddy underwriting, made bad loans pre Great Recession. They sold the loans to servicers, who were backed by the govt. The servicers had major problems, thus the fed had to step in. The govt then went t back to BofA,Wells,Chase and said "pay or else." The big banks tried to suck as much as they could back out of the servicers, then dragged their feet before eating the rest. The big banks were partially bailed out on this money they had to eat. Is that it?
Again, I'm not sure I understand this, but I'd like to, as I imagine this is what is going to happen in the next couple years.
