You really have to read the underlying article, Reuters’ Felix Salmon’s report, to get the full flavor of what’s about to explode, but Business Insider has a nice summary: basically, banks like Bank of America hired a third-party to spot-check the loans it was buying and learned that, on a sample of perhaps 5% of the total package, 45% were fraudulent. Fine: BOA forced the sellers to make good on that slice of loans, but then proceeded to sell off the remaining 95% without warning the buyers that probably 45% of the loans were no good. And B of A was just one of the major banks engaging in this scam.
Really – it’s time to resume practicing law. Real estate used to be easy, compared to lawyering, but this stuff? Shooting fish in a barrel.