Banks May Face $97 Billion Loss From Mortgage Mess
Published: Wednesday, 27 Oct 2010 | 2:36 PM ET
By: Kate Kelly
CNBC Reporter
Banks and other mortgage lenders could be on the hook for at least $97 billion because of the poor and possibly illegal handling of mortgages that surfaced during the current foreclosure mess, according to mortgage securities specialists.
The specialists—representatives from law firms and mortgage backed securities traders—told a gathering of prominent hedge funds in New York Wednesday that a wave of so-called putbacks was coming from these problematic home loans.
Putbacks occur when investors in mortgage-backed securities return individual home loans whose nature or handling violated their original terms to the companies who issued them—forcing those issuers to repurchase the loans at par.
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