Taxpayers are on hook if banks refuse to buy back faulty loans

Fannie Mae and Freddie Mac are asking banks to repurchase home loans that did not meet certain requirements, per their contracts with the lenders, but many financial institutions are refusing to buy back the loans. The situation often leads to a battle between Fannie or Freddie and the mortgage lender as the banks may argue that the repayment requests are also flawed. When banks refuse to pay, however, taxpayers are ultimately forced to cover the losses.

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