Banks renege on agreement to buy back bad loans

Banks got loan coverage from government-backed Fannie Mae and Freddie Mac as they went out offering subprime loans.  They signed agreements that they would buy the loans back if they failed to "meet certain standards relating to borrower incomes, job status or assets."

Just kidding!

Freddie also said that as of the end of March, 34 percent of its buyback requests had been outstanding for 90 days or more. Three months earlier, that figure was 30 percent. That increase suggests a greater reluctance among banks to respond to Freddie’s demands.

And who's left holding the bag as bank profits are rising?

taxpayers are the ones holding the bag when institutions try to avoid losses by refusing to buy back problem loans they have sold to Fannie Mae and Freddie Mac, the mortgage finance giants that are wards of the state.