Bloomberg News: Cost To Five Biggest Banksters For Faulty Mortgages, Foreclosure Abuses - $65B & Counting

Bloomberg reports:

• Faulty mortgages and foreclosure abuses have cost the nation’s five biggest home lenders at least $65.7 billion, according to a tally by Bloomberg News, and new claims may push the industrywide total to twice that amount.



• Bank of America Corp. (BAC), the largest U.S. lender, had the biggest costs, totaling $39.1 billion since the start of 2007, according to data compiled by Bloomberg. JPMorgan Chase & Co. (JPM), ranked second by assets, followed with $16.3 billion, and Wells Fargo & Co. (WFC), the biggest U.S. home lender, had $5.09 billion, the data show.



• The costs have eclipsed predictions from bankers and analysts that lenders would suffer only modest damage from what Bank of America Chief Executive Officer Brian T. Moynihan has called “the mortgage mess.”



• Paul Miller, the FBR Capital Markets & Co. analyst, said costs for all banks could surpass $121 billion as the bill comes due for lax lending practices.



• “You’re not talking about improperly stapling together two documents, you’re talking about systematic fraud in the system,” Neil Barofsky, the former special inspector general for the U.S. Treasury’s Troubled Asset Relief Program, said in an interview. “What this shows is that before the financial crisis, the banks were essentially lying to the purchasers of the mortgages about the quality.”



• The industry-wide errors “were not minor slip-ups,” said Peter Swire, a law professor at Ohio State University in Columbus, Ohio, and until last year a special assistant to President Barack Obama for economic policy. “Our biggest banks were talking homeowners into taking some of these bad loans at the front end and then dumping fraudulent loans on investors at the back end.”

For more, see Mortgage Debacle Costs U.S. Banks $66 Billion as Bad Home Loans Sap Profit.