5 Things to Know About Government Lawsuits Against Mortgage Banks
Even though housing prices in Las Vegas and elsewhere began sliding in the mid-2000s, and the mortgage crisis didn’t strike until 2008, the federal government is finally prosecuting banks for committing various illegal acts. This should be welcome news for underwater homeowners who are considering filing Las Vegas bankruptcy. What benefits this will provide anyone is debatable, but based on Washington Post coverage, here are five things to consider.
- The bank that federal prosecutors targeted is Bank of America because of its alleged sale of mortgages to government-sponsored enterprises, Fannie Mae and Freddie Mac, which cost the government more than $1 billion in losses. BoA’s decision to purchase Countrywide Financial in 2008 is the source of the bank’s problems because Countrywide engaged in all kinds of abusive and fraudulent lending practices.
- Earlier in October 2012, the government sued Wells Fargo for misleading the Federal Housing Authority as to the value of more than 6,000 mortgages, many of which have cost the agency in insurance claims. Wells Fargo ignored its own employees who warned superiors of the danger.
- One professor at the University of Missouri claims that because the government is not indicting bank executives, the government’s actions aren’t much of a deterrent to future mortgage fraud.
- The banks counter that lawsuits and regulations will force them to charge borrowers more, making it harder for people who want to buy a home to do so.
- What benefits homeowners receive with a government victory aren’t obvious. The government would be reimbursed for its losses on bad mortgages, and some perpetrators who aren’t very high up on the chain would go to prison.
The bottom line is that while the prosecutions won’t do much for individual homeowners, it might get the government some of its money back. Thus, if you are underwater in your mortgage, you probably shouldn’t wait for more relief from the government. Instead, talking to a Las Vegas bankruptcy lawyer will help you assess your options and help you determine if filing bankruptcy is right for you.
For more questions about bankruptcy in Las Vegas, please feel free to contact an experienced Freedom Law Firm Las Vegas bankruptcy attorney for a free initial consultation. Call us at 1-702-299-6719 to set up your free consultation.