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Daily Real Estate News  |  November 24, 2010  |   The Latest Weapon in the War on Foreclosures
Loan detectives are a growing cottage industry.

The core of this new business is reviewing hundreds of pages per loan, looking for evidence of fraud, misrepresentation, and violations of underwriting guidelines. This information is used to force banks and other lenders to buy back loans from bond insurers, holders of mortgage-backed securities and other customers of these forensic loan-review firms.

Losses to U.S. banks from loan repurchases could reach $40 billion to $90 billion, according to J.P. Morgan Securities. For that reasons, banks are resisting every claim. "It is a day-to-day, hand-to-hand combat," Bank of America Chief Executive Brian Moynihan said.

Source: The Wall Street Journal, Ruth Simon (11/22/2010)

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