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Before the crisis they were deceived by false promises, now insist the buyer of the nearly worthless mortgage bonds for compensation. In applicant communities they drag the banks to court. On the Citigroup and other banks might cost in the billions to come.

NEW YORK. America’s banks are preparing to expensive processes in the scandal before to mortgage bonds. Citigroup is now published in a document to the U.S. Securities and Exchange Commission that it is being sued by several investors – including the U.S. broker Charles Schwab. Wells Fargo informed the supervisory authority, the Bank could be “possible losses” not assess in connection with the investigations and court cases currently. Bank of America said that mortgage-backed bonds – so-called mortgage-backed securities (MBS) – are worth $ 54 billion on the subject of court proceedings.

High legal hurdles

For weeks in the United States Institute of homeowners, politicians and their investors are attacked because they are to be run under a number of errors. Charles Schwab throws around in front of the Citi and ten other institutions, on the sale of mortgage bonds issued false information about the credit quality of the underlying mortgages made to have. This should have been at Deutsche Bank is the case, as shown in the application. The bank declined to comment to do so.

More dangerous than the isolated actions like the Schwab could however be a major initiative of other buyers of mortgage securities. They organize themselves, especially in a community of plaintiffs. “If investors have to stay together, then the big banks get fresh capital to meet the demands,” said mortgage expert Bill Frey, who has called the campaign to life. Frey is the founder of Greenwich Financial Services. The company is structured in complex financial products.

Who are the investors, declined to comment to Frey. Financial sources said there are hedge funds, pension funds, insurance companies and banks from around the world. Even the world’s largest asset manager Blackrock and Pimco, Allianz’s subsidiary should belong to it. Overall, they hold securities worth about 750 billion dollars.
Who wants to take action against a bank, but high legal hurdles must be overcome. The institutes have joined thousands of mortgages into pools and parts sold to investors around the world. To complain to themselves, 25 percent of the shareholders of a pool together. Frey has been cooperating with a lawyer from Texas, created a register in which the investors can enter with their papers. There are enough buyers of the bonds and provide them to the banks to prove fault, then they can demand the withdrawal of the affected loans. The bank would need to buy the loans back to their original value and pay compensation.

Frey claims to have already made thousands of errors. Analysts estimated that this could cost the U.S. financial industry around 180 billion dollars. “Investors may remain anonymous,” says Frey. Some did not want to openly disagree with the bank from which they bought the papers. Great was the fear of jeopardizing relationships with other areas. Moreover, no one wants trouble with the U.S. government. Could be forced to step in when Frey bring recovery is a major U.S. institution in basic needs of again.

A compromise is sought

Before submitting Investors Action is therefore working on a compromise. Washington is already on. A possible model states that the data bank outsources common and preferred shares to a trust company that it compensates the investors. If necessary, the affected Bank, FDIC deposit insurance fund is based. Behind him stands the Treasury, which is necessary if the Fund loans. German state banks have also bought in boom times questionable mortgage loans and suffered heavy losses in the crisis. “As far as I know, has been connected but not a German bank in the group,” says Frey.

For many of us, the single biggest financial transaction is buying a home. Even more significant than the hefty down payment we fork over is the 15- to 30-year mortgage that needs feeding every month. If you have this much at stake, a little knowledge can go a long way, which is where Eric Tyson and Ray Brown come in. In Mortgages for Dummies, Tyson and Brown (who also wrote Home Buying for Dummies and home selling for Dummies) provide a comprehensive introduction for anyone who is contemplating a mortgage. The book tells you how to evaluate your creditworthiness, determine your borrowing power, and shop for a lender, as well as covering the various types of loans. The authors also devote a section to refinancing and discuss what you should consider when prepaying a loan. They include amortization and remaining-balance tables, and a useful glossary. Whether you’re a first-time home buyer or are just looking to refinance, you’ll find this a valuable, easy-to-use guide.