Lawsuits on mortgage trustees are just starting. According to
Bank of New York Mellon
, Bank of America and
(C - Get Report)
are the major mortgage trustees.
speculates that since these institutions didn't underwrite, sell, securitize, service, or ship loans according to regulations, the odds are low that the trust departments got it right. So far, Schnedierman has requested documents from Deutsche Bank and Bank of New York Mellon.
In early September the Federal Housing Finance Agency (FHFA), the receiver for FNMA and FHLMC, sued Bank of America, Citigroup,
(JPM - Get Report)
demanding refunds from these institutions for loans sold to FNMA and FHLMC that were based on false or missing information about the borrowers or the properties. The FHFA said that the two mortgage giants purchased $6 billion from Bank of America, $24.8 billion from
which is now owned by Bank of America, and $3.5 billion from Citigroup.
Lawsuits and foreclosure issues are making the TBTF banks sorry they are in the mortgage business. JPMorgan's Dimon announced that they are going to be leaving the mortgage business, and Bank of America that by year's end, they will stop buying mortgages from correspondents.