Bank of America, JPM Chase, Citi and Wells Fargo are having to repurchase their bad loans back from Freddie and Fannie.

It’s about time!

These banks bilked billions from us…the tax payers and they have not been held accountable.

What does all this mean?

Fannie and Freddie are “Government Sponsored Entities” or “GSE’s” that are in place to lend money and “shore up” the institutions or banks.

Another role or GSE’s is to buy “Performing” loans so that the banks will have money to lend. If the loans default or “not -perform” the banks must buy it back…pretty simple.

Why do Fannie and Freddie offer this service?

Pretty simple…to keep money in the hands of the banks and free them banks up to lend more money…makes sense.

We’ll…the banks loans are defaulting at a huge rates…and they are not buying them back or living up to their end of the deal.  Instead, the banks are spending these dollars on their infrastructure and lending very little money.  The money the Top 4 are lending is insured by FHA…another GSE that, as long as borrowers meet their stringent guidelines…will insure the loan if it defaults…and the bank collects interest to keep them running and pay their Management ridiculous sums of money for screwing the government out of more money!….)Sorry about that…I’m such a skeptic when it comes to these banks)

We’ll to cut it short…these banks may be in trouble!

More to come!

Best,

Kris