Connect with us

Housing News

The sneaky bailout Bank of America just got from American taxpayers



“Where does it end?”

Guess who now owns even more of Bank of America’s disastrous mortgage portfolio? You do, America. Because Fannie Mae is not a government sponsored entity, you own Fannie and because Fannie just bought the servicing rights to a substantial amount of bad loans from Bank of America, you just gave a sneaky backdoor bailout to BoA.

“Where does it end?” asks Fortune Magazine’s Abigail Field. Fannie Mae bought the loans for more than $500 million, despite BoA getting more bailout funds from the government (as part of TARP) than any other bank. According to the Wall Street Journal, an undisclosed number of loans were purchased by Fannie, but prior to the sneaky bailout, “seven million loans [were] still causing the most problems.”

BoA has had a tough year with failing loans, federal, state and homeowner lawsuits, and stock that that has taken a 40% nosedive in 2011 alone, putting them in the position to need to raise capital. Enter your tax dollars, but not in the traditional form of TARP funds.

Field noted, “the $500 million is surely more than the servicing rights are worth in an arms-length transaction. How do we know? Beyond the comment that the loans are expected to “deteriorate further,” the goal of the intervention can only be to fix Bank of America’s capital structure, which is easier for the government to do if it overpays for the rights.”

Buying up defaulted loans is normal, but in this case? Not so much.

The purchase of defaulted loans is not an uncommon practice, and can be lucrative if “cheaply produced foreclosure paperwork isn’t questioned, and if the foreclosures have equity and can be resold easily with lots of junk fees,” Field says, “but the mortgage servicing rights Fannie Mae bought are stinkers: they have a 13% delinquency rate, which means lots of foreclosures and loan modifications.”

Fortune Magazine reports that Fannie Mae is purchasing “the servicing rights in order to transfer the day-to-day management of those loans to a different company” which they deem a signal that Fannie is overpaying and if the rights were worth what they paid, a private company would have just bought directly from BoA, but instead, Fannie gave them a bailout.

The purchase is confusing as Fannie Mae just sought a bailout of their on in the form of $5.1 billion just last week. This feels a lot like a political move to pick winners and losers in the private sector, and there are more questions than there are answers about what appears to be Fannie bailing out Bank of America.

Tara Steele is the News Director at The American Genius, covering entrepreneur, real estate, technology news and everything in between. If you'd like to reach Tara with a question, comment, press release or hot news tip, simply click the link below.

Continue Reading


  1. Roberta Murphy

    August 12, 2011 at 12:45 pm

    Of course. Fannie Mae/taxpayers bail out Bank of America and Fannie Mae rents out foreclosures, opening doors for even more fraud, graft and taxpayer burden. All elected officials need to have their feet held to the fire on this one.

    • Randy Pereira

      August 12, 2011 at 2:06 pm

      Took the words right out of my mouth… Thank you Roberta.

  2. Brad Officer - Short Sale Jacksonville

    August 12, 2011 at 1:55 pm

    The Fed is out of control! …..and $500mm? That's it? I'd bet BOA has well over $500mm in pending short sales. If they needed the cash, why didn't they start waiving these deals through their crap system?

    (I had to delete all my other thoughts before posting)

  3. Max Duran

    August 13, 2011 at 12:04 am

    Why doesn't it surprise me?!?! Banks these days will charge you a fee for everything, it's sicking.
    And every year you hear stories of Bank executives getting their huge bonuses, and the rest of
    us in one way or another are giving them a life of luxury on a silver platter. Banks = Fraud!!!!!!

  4. Max Duran

    August 13, 2011 at 12:12 am

    Very good article Tara. I think Roberta summed it up pretty good.

  5. Sig

    August 13, 2011 at 7:40 am

    I agree with you Roberta but how do you hold a politicians feet to the fire? They have more slippery moves than a belly dancer.

    • Roberta Murphy

      August 14, 2011 at 12:29 pm

      Sig: We need to call, email, blog and make lots of noise about damaging propositions such as this. With Congress on vacation, it's a great time for us to give them an earful from "back home."

  6. Joe Loomer

    August 14, 2011 at 4:32 am

    If anyone thinks this is the end of the taxpayer bailouts of the toxic leftovers of the sub-prime mess, they're gravely mistaken.

    Navy Chief, Navy Pride

  7. Manhattan Beach Realtor

    August 14, 2011 at 12:48 pm

    If there's one thing we can count on, it's that the Federal Reserve system will do anything it can to protect member banks. The Fed is the real culprit, using dollar debasement as a form of taxation to fuel bailouts, and perpetual deficit spending.

  8. Steve Nicewarner

    August 16, 2011 at 2:58 pm

    I think the Feds made the decision in 2008 that BoA can not be allowed to fail no matter what. After all, does the FDIC even have the assets to seize BoA? Who would they sell it too?

Leave a Reply

Your email address will not be published. Required fields are marked *


Austin tops the list of best places to buy a home

When looking to buy a home, taking the long view is important before making such a huge investment – where are the best places to make that commitment?



Looking at the bigger picture

(REALUOSO.COM) – Let us first express that although we are completely biased about Texas (we’re headquartered here, I personally grew up here), the data is not – Texas is the best. That’s a scientific fact. There’s a running joke in Austin that if there is a list of “best places to [anything],” we’re on it, and the joke causes eye rolls instead of humility (we’re sore winners and sore losers in this town).

That said, dug into the data and determined that the top 12 places to buy a home are currently Texas and North Carolina (and Portland, I guess you’re okay too or whatever).

They examined the nerdiest of numbers from the compound annual growth rate in inflation-adjusted GDP to cost premium, affordability, taxes, job growth, and housing availability.

“Buying a house is a big decision and a big commitment,” the company notes. “Although U.S. home prices have risen in the long term, the last decade has shown that path is sometimes full of twists, turns, dizzying heights and steep, abrupt falls. Today, home prices are stabilizing and increasing in most areas of the U.S.”

Click here to continue reading the list of the 12 best places to buy a home…

Continue Reading

Housing News

Average age of houses on the rise, so is it now better or worse to buy new?

With aging housing in America, are first-time buyers better off buying new or existing homes? The average age of a home is rising, as is the price of new housing, so a shift could be upon us.



aging housing inventory

aging housing inventory

The average home age is higher than ever

(REALUOSO.COM) – In a survey from the Department of Housing and Urban Development American Housing Survey (AHS), the median age of homes in the United States was 35 years old. In Texas, homes are a bit younger with the median age between 19 – 29 years. The northeast has the oldest homes, with the median age between 50 – 61 years. In 1985, the median age of a home was only 23 years.

With more houses around 40 years old, the National Association of Realtors asserts that homeowners will have to undertake remodeling and renovation projects before selling unless the home is sold as-is, in which case the buyer will be responsible to update their new residence. Even homeowners who aren’t selling will need to consider remodeling for structural and aesthetic reasons.

Prices of new homes on the rise

Newer homes cost more than they used to. The price differential between new homes and older homes has increased from 10 percent traditionally to around 37 percent in 2014. This is due to rising construction costs, scarcity of lots, and a low inventory of new homes that doesn’t meet the demand.

Click here to continue reading this story…

Continue Reading

Housing News

Are Realtors the real loser in the fight between Zillow Group and Move, Inc.?

The last year has been one of dramatic and rapid change in the real estate tech sector, but Realtors are vulnerable, and we’re worried.



zillow move

zillow move

Why Realtors are vulnerable to these rapid changes

(REALUOSO.COM) – Corporate warfare demands headlines in every industry, but in the real estate tech sector, a storm has been brewing for years, which in the last year has come to a head. Zillow Group and Move, Inc. (which is owned by News Corp. and operates ListHub,, TopProducer, and other brands) have been competing for a decade now, and the race has appeared to be an aggressive yet polite boxing match. Last year, the gloves came off, and now, they’ve drawn swords and appear to want blood.

Note: We’ll let you decide which company plays which role in the image above.

So how then, does any of this make Realtors the victims of this sword fight? Let’s get everyone up to speed, and then we’ll discuss.

1. Zillow poaches top talent, Move/NAR sues

It all started last year when the gloves came off – Move’s Chief Strategy Officer (who was also’s President), Errol Samuelson jumped ship and joined Zillow on the same day he phoned in his resignation without notice. He left under questionable circumstances, which has led to a lengthy legal battle (wherein Move and NAR have sued Zillow and Samuelson over allegations of breach of contract, breach of fiduciary duty, and misappropriation of trade secrets), with the most recent motion being for contempt, which a judge granted to Move/NAR after the mysterious “Samuelson Memo” surfaced.

Salt was added to the wound when Move awarded Samuelson’s job to Move veteran, Curt Beardsley, who days after Samuelson left, also defected to Zillow. This too led to a lawsuit, with allegations including breach of contract, violation of corporations code, illegal dumping of stocks, and Move has sought restitution. These charges are extremely serious, but demanded slightly less attention than the ongoing lawsuit against Samuelson.

2. Two major media brands emerge

Last fall, the News Corp. acquisition of Move, Inc. was given the green light by the feds, and this month, Zillow finalized their acquisition of Trulia.

…Click here to continue reading this story…

Continue Reading

Our Great Partners

American Genius
news neatly in your inbox

Subscribe to our mailing list for news sent straight to your email inbox.

Emerging Stories

Get The American Genius
neatly in your inbox

Subscribe to get business and tech updates, breaking stories, and more!