Bigger Bailout for Unemployed Borrowers

Thanks, and I stand by my earlier statement that the real intended beneficiaries of this policy are the banks who avoid marking down the value of the loan. The borrowers in question are already over-extended. This is an extend and pretend policy done with tax payer money.

There's an interesting dynamic going on. Fannie & Freddie are acting responsibly. I noticed this a while ago around the time the former CFO of Freddie committed suicide, it really shook people up and I still think there's more to the story.

Anyway, the GSE'S are pushing back on the banks to buy back bad mortgages. I think the Fed's actions and this new zero interest rate initiative are in part a way to counter the GSE push back. BAC does not want to take the hit to their balance sheet which is still not repaired.
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http://www.ritholtz.com/blog/2010/08/bofa-buyback-disputes-11-2b/
Speaking of untidy accounting issues:

The American Banker reports today that “Bank of America, in a new public filing, said it had $11.2 billion of “unresolved” mortgage buyback requests at June, a 50% spike since the beginning of the year.”

These buyback disputes are with Fannie Mae and Freddie Mac ($5.6 billion), although AB reported BofA “is having trouble with claims made to mortgage insurance firms” — in particular, the monoline insurers, for another $4 billion.

AB quoted the bank’s 10-Q SEC filing as acknowledging that “disputes have increased with buyers and insurers regarding representations and warranties.”

BofA is the second largest residential funder in the US