Banks, Real Estate | featured news

More and more, homeowners say that mortgages they thought were dead and buried are springing back to life, sometimes haunting them all the way into foreclosure.

Massachusetts' top lawmaker has sued five top U.S. banks for allegedly foreclosing illegally on homes in the state and for deceptive loan servicing, including robo-signing.

"It was not the banks that created the mortgage crisis. It was, plain and simple, Congress," said New York City Mayor Michael Bloomberg at an event for business leaders.

JPMorgan Chase & Co and Bank of America Corp were hit with new lawsuits by investors seeking to recover losses on $4.5 billion of soured mortgage debt, expanding the litigation targeting the two largest U.S. banks.

JPMorgan Chase & Co, the second largest U.S. bank by assets, led a broader decline in bank share prices, as investors feared lenders face a growing list of lawsuits due to problem mortgages.

The U.S. regulator for Fannie Mae and Freddie Mac accuses the banks of negligence in misrepresenting the risks embedded in the securities sold to the home-finance giants.

The agency that oversees mortgage markets is preparing to file suit against more than a dozen big banks, accusing them of misrepresenting the quality of mortgages they packaged and sold during the housing bubble, The New York Times reported on Thursday.

Bank of America Corp is looking to sell its correspondent mortgage business and the unit's employees could be notified as soon as Wednesday, the Wall Street Journal said, citing people familiar with the matter.

Mortgage finance giant Freddie Mac FMCC.OB said on Monday it would ask for an additional $1.5 billion from taxpayers due to losses stemming from the weak housing market.

The insurer AIG is suing Bank of America Corp to recover more than $10 billion of losses from a "massive fraud" on mortgage debt, deepening the morass of litigation faced by the largest U.S. bank.