NY Fed Looks to Require Lenders to Take Back Bad Mortgages

The New York Federal Reserve Bank may require mortgage lenders to repurchase loans from within portfolios of securitizations. The assets are located in the Maiden Lane (ML) portfolios, created to buy troubled assets including residential mortgage-backed securities (RMBS) and collateralized debt obligations (CDOs) from Bear Stearns and American International Group (AIG) as part of the government’s bailout of financial firms. “Through our ongoing management of the Maiden Lane portfolios we are involved in multiple efforts related to exercising our rights as investors in non-agency RMBS or CDO securities including those that require originators to repurchase ineligible loans,” NY Fed spokesperson Jeffrey Smith told HousingWire. “These efforts support our primary goal of maximizing the value of these portfolios on behalf of the American taxpayer.” Bloomberg‘s Dawn Kopecki and Jody Shenn broke the news in a post Wednesday. As HousingWire reported in July, AIG may relinquish its stake in certain mortgage-related bonds as part of an effort to repay bailout funds. In March 2009, AIG disclosed names of dozens of trading partners and financial institutions that received billions of dollars in an effort to pay down the company’s debts. Write to Diana Golobay.