Wachovia sues California mortgage firm over loans

Struggling to manage its mortgage losses, Wachovia Corp. is suing a California mortgage lender for failing to buy back bad loans.

The dispute involves nearly $12 million in home-equity mortgage loans that Wachovia’s corporate and investment-banking unit agreed in June 2007 to purchase from Just Mortgage Inc. In its suit, Wachovia claims Just Mortgage agreed to repurchase certain loans, such as those that turned delinquent shortly after Wachovia bought them, or loans with missing documentation. If a borrower was late by 30 days or more on any of the first six monthly payments after Wachovia bought the loan, for example, then Just Mortgage would buy it back.

And if Just Mortgage failed to provide certain legal documents for the loans within 180 days of the closing date, Wachovia could request the firm substitute a “qualified loan” or buy those loans back as well.

Last September, Wachovia notified Just Mortgage that numerous loans had defaulted early or were missing documents. It asked the firm to buy them back at the agreed-upon price, which is 90% of the loan’s principal balance. Just Mortgage refused to take them back.

Source:http://www.bizjournals.com/charlotte/stories/2008/07/21/newscolumn3.html?ana=from_rss