LOS ANGELES (CN) - In a federal class action, foreclosed homeowners sued Fannie Mae, Freddie Mac and other "leading providers of residential real estate mortgages," claiming their disregard for underwriting standards caused the mortgage meltdown, which brought more than 930,000 foreclosure filings in the third quarter of 2010 alone.
IndyMac Bank and Countrywide Financial are among the host of mortgage originators named in the 101-page complaint, which seeks damages for the 11 named plaintiffs whose "credit ratings and histories were damaged or destroyed."
"The fraud perpetrated by the originator defendants from 2000 through 2009 was willful and pervasive," the complaint states. "It began with simple greed and then accelerated when said defendants discovered they could not sustain their businesses, unless they systematically and significantly reduced their underwriting standards and created increasingly complex, esoteric, and high-risk loan products to induce plaintiffs and other borrowers into ever larger loans on increasingly risky terms. As the originator defendants knew from no later than 2004, these loans were unsustainable for the borrowers and to a certainty would result in a crash that would destroy the equity invested by plaintiffs and other California borrowers. Further, those actions would cause the high risk pools of mortgages the originator defendants had sold to Real Estate Mortgage Investment Conduits (REMICs) and/or trusts to default on a nationwide scale. ...
IndyMac Bank and Countrywide Financial are among the host of mortgage originators named in the 101-page complaint, which seeks damages for the 11 named plaintiffs whose "credit ratings and histories were damaged or destroyed."
"The fraud perpetrated by the originator defendants from 2000 through 2009 was willful and pervasive," the complaint states. "It began with simple greed and then accelerated when said defendants discovered they could not sustain their businesses, unless they systematically and significantly reduced their underwriting standards and created increasingly complex, esoteric, and high-risk loan products to induce plaintiffs and other borrowers into ever larger loans on increasingly risky terms. As the originator defendants knew from no later than 2004, these loans were unsustainable for the borrowers and to a certainty would result in a crash that would destroy the equity invested by plaintiffs and other California borrowers. Further, those actions would cause the high risk pools of mortgages the originator defendants had sold to Real Estate Mortgage Investment Conduits (REMICs) and/or trusts to default on a nationwide scale. ...
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