Rep. Darrell Issa (R-Calif.), chairman of the House Oversight and Government Reform Committee, opened an investigation into the reported Fannie Mae purchase of a Bank of America (BAC: 7.33 +3.97%) mortgage servicing portfolio.
According to the Wall Street Journal, the deal was finalized in August. The portfolio includes 400,000 loans with an unpaid principal balance of $73 billon and a delinquency rate of 13%, twice the national average. Fannie reportedly paid $500 million for it.
"Some commentators have labeled this transaction as a back-door bailout of BofA by permitting the bank to shift part of its risky portfolio to American taxpayers. Under these circumstances, I am unclear why the Federal Housing Finance Agency allowed Fannie to proceed with the transaction," Issa wrote in a letter to FHFA Acting Director Edward DeMarco.
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