San Francisco Home Loan Bank Wants $19 billion Back From Wall Street
The Federal Home Loan Bank of San Francisco is upset with a bunch of stockbrokers and is seeking to rescind the purchase of mortgage-backed securities worth $19.1 billion.
If the Federal Home Loan Bank of San Francisco can go back and seek to undo the purchase of mortgage-backed securities because of alleged “untrue or misleading statements” then why is it that borrowers who were sold option ARMs, interest-only loans and mortgages based on no-doc loan applications can’t do the same?
Does anyone really think that a large number of such loans, or maybe most of such loans, were sold with anything other than untrue and misleading statements? After all, why would any sentient borrower go to a lender who promised anything other than the best possible rates and terms — advertised and promoted qualities which were plainly not delivered with toxic loans.
Statement of the Federal Home Loan Bank of San Francisco
Today the Federal Home Loan Bank of San Francisco (Bank) filed complaints in the Superior Court of California, County of San Francisco, against nine securities dealers in relation to certain of the Bank’s investments in private-label residential mortgage-backed securities (PLRMBS). The Bank is seeking to rescind its purchases of 134 securities in 113 securitization trusts, for which the Bank originally paid more than $19.1 billion. The Bank’s complaints allege that the dealers made untrue or misleading statements about the characteristics of the mortgage loans underlying the securities.
All of the PLRMBS in the Bank’s mortgage portfolio, including those identified in the complaints filed today, were rated AAA when purchased, based on the information provided by the securities dealers. The Bank employs conservative criteria and guidelines for all its MBS investments. The Bank invests in high-quality financial instruments to facilitate its role as a cost-effective provider of credit and liquidity to its member financial institutions. These investments support the Bank’s mission of promoting housing, homeownership, and community development by providing the Bank with greater financial flexibility in helping members meet the credit needs of their communities during all economic times and in funding the Bank’s Affordable Housing Program and other programs that create affordable housing and promote community economic development.
In filing these complaints, the Bank seeks to continue supporting its mission and to protect the interests of its member shareholders, which include over 400 community banks, credit unions, and savings institutions headquartered in Arizona, California, and Nevada that serve millions of consumers.
© Copyright 