Economy

Eugene

(61,894 posts) Mon Jan 7, 2013, 09:51 AM Jan 2013

Bank of America reaches $10 billion Fannie Mae settlement

Source: USA Today

Bank of America reaches 10 billion Fannie Mae settlement

Kim Hjelmgaard, USA TODAY 8:39a.m. EST January 7, 2013

Bank of America said Monday that it has reached a $10 billion settlement with federal mortgage issuer Fannie Mae over allegations of the improper handling of mortgages during the financial crisis.

The Charlotte, N.C-based bank will pay $3.6 billion to settle claims related to the sale and delivery of certain residential mortgage loans.

And Bank of America will also repurchase $6.75 billion worth of residential mortgage loans it sold to Fannie Mae for less than what the bank said they worth.

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Bank of America reaches $10 billion Fannie Mae settlement (Original Post) Eugene Jan 2013 OP

What this bit supposed to mean ? dipsydoodle Jan 2013 #1

The bank is raising cash... Sekhmets Daughter Jan 2013 #2

By analogy within the leasing industry dipsydoodle Jan 2013 #3

Debt collection agencies make the Sekhmets Daughter Jan 2013 #4

dipsydoodle

(42,239 posts)

1. What this bit supposed to mean ?

Reply to Eugene (Original post)

Mon Jan 7, 2013, 09:58 AM

Jan 2013

"The bank also said it had agreed to sell the servicing rights on 2 million residential mortgage loans worth about 306 billion."

Sekhmets Daughter

(7,515 posts)

2. The bank is raising cash...

Reply to dipsydoodle (Reply #1)

Mon Jan 7, 2013, 10:19 AM

Jan 2013

"servicing' means they collect the mortgage payment, escrow property taxes and then pay them, collect any insurance that is required by the loan terms. There are companies that do this and pay the banks for the servicing contracts.

dipsydoodle

(42,239 posts)

3. By analogy within the leasing industry

Reply to Sekhmets Daughter (Reply #2)

Mon Jan 7, 2013, 10:25 AM

Jan 2013

I think you'll find they get commission on debt collection too. It then becomes a matter of how hard they lean on someone to recover the debt.

Sekhmets Daughter

(7,515 posts)

4. Debt collection agencies make the

Reply to dipsydoodle (Reply #3)

Mon Jan 7, 2013, 10:35 AM

Jan 2013

bulk of their money buying the debt for considerably less than the face value. They pay hourly wages, have minimum quotas and pay 'bonuses' on a sliding scale. They do not provide mortgage servicing, that is a separate industry.

The mortgage servicer must supply an annual statement outlining the duties that were performed. In return for this assistance, the servicer is compensated with a specific fee outlined in the contract established at the beginning of the agreement. Mortgage servicing rights can be bought and sold, resulting in the transfer of any administrative obligations.

Read more: http://www.investopedia.com/terms/m/msr.asp#ixzz2HIgUfqTN

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