Housing Market, Investor | featured news

Big investors are pouring unprecedented amounts of money into real estate hard hit by the housing crash, bringing those moribund markets back to life but raising the prospect of another Wall Street-fueled bubble that won’t be sustainable.

Most of the $40 billion Bank of America has set aside to pay out over the mortgage meltdown can be blamed on malfeasance at Countrywide Financial. But some investors say that BofA’s hands are not totally clean in this mess — and that the bank has gotten off too easy thus far.

Federal regulators charged a Citigroup unit with negligence Wednesday, saying it misled investors about an investment product it used to bet against them as the housing market deteriorated. Citigroup agreed to pay a settlement of $285 million, which will be distributed to investors, the Securities and Exchange Commission said.

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.

Investors who were misled into purchasing complex mortgage securities just before the housing market collapsed will receive all their money back.

Investors drove up U.S. home sales last month, plunking down cash to grab cheap homes at risk of foreclosure. But first-time homebuyers, who are crucial to a housing recovery, stayed away.

Bank of America Corp's Countrywide mortgage unit has been sued by investors claiming they were victimized in a "massive fraud" when they bought mortgage-backed securities.

The Securities and Exchange Commission on Monday accused a New York firm that helped manage complex mortgage securities of defrauding investors as the housing market collapsed.

The stock market rebounded Wednesday after a stronger-than-expected increase in pending home sales restored investors' optimism about the economy.

Recently released emails show how Goldman Sachs built its mortgage business by closely working with lenders such as Washington Mutual and Long Beach, two firms that a Senate review said "polluted the financial system" with souring loans.