US: Banks could be sued over sub-prime mortgage failures

2nd September 2011

The Guardian reports that the US Federal Housing Finance Agency (FHFA) which is overseeing the remains of failed mortgage giants Fannie Mae and Freddie Mac, is reportedly planning to argue that America's biggest banks failed to check the health of mortgages before they sold them on to investors.

The Guardian reports that the collapse of hundreds of thousands of sub-prime mortgages triggered the 2008 credit crisis and the collapse of Fannie and Freddie.

The New York Times said the FHFA is expected to file the lawsuit against the banks, including Bank of America, JP Morgan, Goldman Sachs and Deutsche Bank, on Friday. The agency claims banks failed to notice that borrowers were taking on mortgages that they could not afford.

It follows a similar $900m lawsuit filed against Swiss bank UBS in July. At the time UBS said it would "vigorously" defend all charges brought against it.

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