At the moment, things look bad for Bank of America but this too shall pass.
Yves Smith wrote a nice summary of the latest on ForeclosureGate (Naked Capitalism, June 13). This includes just released information concerning HUD assistant regional inspector general William Nixon. Supposedly, he is after BofA for “significantly hindering” an investigation into wrongfully filed claims on failed mortgages (about $6 billion worth).
Smith reminds us that she saw the BofA purchase of Countrywide as a real loser. Her reference to a prescient column by Gretchen Morgenson from August 27, 2007 contains this gem:
“Countrywide’s entire operation, from its computer system to its incentive pay structure and financing arrangements, is intended to wring maximum profits out of the mortgage lending boom no matter what it costs borrower … One document, for instance, shows that until last September the computer system in the company’s subprime unit excluded borrowers’ cash reserves, which had the effect of steering them away from lower-cost loans to those that were more expensive to homeowners and more profitable to Countrywide.”