Banks Forced to Buy Back Loans That Have Been Modified Under Fannie Mae and Freddie Mac

The four largest U.S. banks, Wells Fargo, Bank of America, Chase, and Citibank, face up to $180 billion in home loan buybacks from government sponsored entities Fannie Mae and Freddie Mac, according to Fitch Ratings.

These loans have reportedly seen higher default rates than loans actually kept on banks’ books, probably because underwriting quality was thrown out the window.

As of June 30, Fannie and Freddie held a combined $354.5 billion in troubled mortgages (delinquent mortgages and real estate owned) on their books.

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