Although a majority of Houston residents have heard about the recent mortgage crisis, or may have been personally impacted by it, very few people knew exactly how the crisis had started and why it was going to create further frustration in the future.
For investors at Fannie Mae, the trouble began between 2000 and 2008 when Countrywide sold them hundreds of mortgages that were touted as being 'quality loans'. But when people began defaulting on their loans, investors realized that there was the possibility that Countrywide may not have sold them reliable mortgages.
By the end of 2008, mortgage lenders such as Fannie Mae and Freddie Mac were on the verge of bankruptcy, struggling to get the original lenders to pay up on the bad loans. When Bank of America finally bought out Countrywide in 2008, they became responsible for paying back what Fannie Mae had failed to get out of Countrywide.
Recently, Bank of America has settled the long-standing argument between Fannie Mae who says that Bank of America is responsible for Countrywide's dishonesty when it came to the quality of its loans. In the settlement agreement, Bank of America has agreed to pay Fannie Mae back approximately $6.75 billion in residential mortgage loans as well as an additional $3.6 billion in cash.
Although this business dispute ended successfully for Fannie Mae, other businesses may not be as lucky, especially those who do not seek legal representation in matters such as this. It's important for business owners and investors to know that in some cases, investments may be guaranteed. In cases such as that, it's almost always worth pursuing legal action in order to reclaim what you may have lost.
Source: The Los Angeles Times, "Bank of America to pay Fannie Mae $10 billion in loan settlement," Jim Puzzanghera, Jan. 7, 2013