Obama announced Tuesday that he’s asked the Justice Department to create a special unit of prosecutors and state attorneys general to investigateg abusive lending and packaging of risky mortgages that led to the housing crisis. And he’s tapped an avowed Wall Street enemy, New York Attorney General Eric Schneiderman, to help run the crime unit, according to a White House official.

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Bank of America Corp. (BAC) and JPMorgan Chase & Co. (JPM) reported more demands from investors to repurchase faulty mortgages made after 2008, when the banks said they upgraded their standards to curb defaults.

Claims from investors for loans originated in 2009 or later more than tripled to $153 million from a year earlier for New York-based JPMorgan, the biggest U.S. bank by assets, and almost tripled to $164 million for Bank of America, according to their third-quarter reports. The firms also said claims increased for loans made in 2005, before the housing bubble peaked.

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The housing boom created a rich climate for mortgage fraud and while the bust that followed the boom has changed the nature of the crime, it has provided continued opportunities which the Federal Bureau of Investigation (FBI) is attempting to quantify. The Bureau has released a study that attempts to quantify the breadth and depth of mortgage fraud in 2010 so FBI program managers and the general public can better understand the current threat.

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URBANDALE, Iowa—In two squat, suburban office-park buildings here, Richard Barrent is digging through loan files that could help decide who pays for the mortgage-paperwork debacle.

The former Wells Fargo & Co. quality-assurance manager’s two-year-old company is part of a cottage industry of loan detectives obsessed with detecting fraud, misrepresentations and violations of underwriting guidelines. Such discoveries can be used as ammunition to force banks and other lenders to buy back loans from bond insurers, holders of mortgage-backed securities and other customers of forensic loan-review firms.

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By John W. Schoen

Senior producer

Since the housing bubble burst more than three years ago, lenders have been fending off legal challenges from homeowners who say they were duped by bad mortgages. Now the industry faces a potentially more formidable adversary: investors who bought bonds backed by those bad loans.

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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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NEW YORK Oct 12 (Reuters) – Warnings abound on the impact of delayed foreclosures on U.S. residential mortgage bonds, but the investors in the securities have not yet taken heed.

Processing errors now plaguing at least three major firms that service mortgage loans — including GMAC Mortgage — may prolong the time it takes to complete foreclosures, raising the chances for deeper losses to bondholders as taxes and insurance payments are fronted, investors and analysts said.

Proceeds from foreclosure sales also tend to decline as the process is dragged out, harming the investors, which run the gamut from pension and mutual funds to insurance companies.

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By CARRICK MOLLENKAMP

Big U.S. banks are facing legal pressure to make up for losses tied to pools of soured low-end mortgage loans.

In the latest effort, a group of investors in 2,300 mortgage securities worth roughly $500 billion is seeking to force several banks that originated or are now servicing faulty subprime-mortgage loans to repurchase or modify them.

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“I think the worst is still in front of us,” Barrent told Structured Credit Investor, an online publication for credit investors.

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