Expert Witness Blog
Mortgage expert witnesses may opine on mortgage fraud, residential mortgages, and wholesale mortgages, among other topics. TheStreet.com reported this week that Bank of America said it will stop originating mortgages through brokers, the latest sign of caution among lenders that are grappling with a horde of buyback requests, lawsuits and fraud accusations stemming from loans that were originated carelessly.
As mortgage delinquencies, defaults and foreclosures have continued to pile up across the nation, Fannie Mae and Freddie Mac began pushing back loans to servicers last year. Over the weekend, news broke that Bank of America had halted foreclosures in dozens of states due to a raft of litigation stemming from paperwork errors. JPMorgan and GMAC Mortgage followed suit while an array of other large lenders, including Citi, U.S. Bancorp, HSBC and PNC Financial Services, are reportedly scrutinizing their foreclosure processes at regulators’ behest.
The so-called “originate to sell” model is central to the problem banks are now facing in regards to buybacks. Mortgage originators had little reason to care about what happened to mortgages once they left the balance sheet via securitization. As a result, those working directly with customers had been trying to push as many applications through the pipeline as quickly as possible, leading to paperwork errors that investors have seized upon to force servicers to buy back debt.
Read more: thestreet.com.