Mortgage losses: US sues fin firms | business | Hindustan Times
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Mortgage losses: US sues fin firms

business Updated: Sep 04, 2011 22:34 IST

A US federal agency has filed lawsuits against 17 financial institutions, including Citigroup, in an attempt to recover billions of dollars in losses from risky mortgage investments. Besides Citigroup, the Federal Housing Finance Agency (FHFA), which oversees mortgage giants Fannie Mae and Freddie Mac, on Friday filed lawsuits against Bank of America, Goldman Sachs, JPMorgan Chase and several other largest Wall Street and financial firms.

FHFA contends the institutions misrepresented the quality of the investments' underlying loans.

"Based on our review, FHFA alleges that the loans had different and more risky characteristics than the descriptions contained in the marketing and sales materials," the agency said. The misrepresentations included significantly overstating borrowers' ability to repay their mortgages, the number of loans on owner-occupied properties and amount of debt on those homes relative to their values.