Happy New Year – Pay Us Now, Please

If anyone thought the GSE 'Buyback Wars' would subside in 2012 all they have to do is read a recent SEC filing from Bank of America, the poster child of repurchase claims. The bank notes that the "criteria by which the GSEs are ultimately willing to resolve claims have changed in ways that are unfavorable to us." In other words, Fannie Mae and Freddie Mac are getting tougher on their demands and how they go about asking for damages/buybacks. As B of A notes: "We intend to continue to closely monitor and update our processes related to these changing [GSE] behaviors and intend to repurchase loans to the extent required under the contracts and standards that govern our relationships with the GSEs." Through Sept. 30 B of A had resolved $25.5 billion of buyback claims but still had another $5 billion that needed to be resolved. Most of these are tied to $1.1 trillion of mortgages originated by Countrywide Financial Corp. (and sold to the GSEs) during the years 2004 to 2008. If only B of A hadn't bought CFC in August 2008. If only, if only.