GE gets subpoena over subprime mortgage operation
DOJ investigating whether GE broke any laws from 2005 to 2007
The Department of Justice subpoenaed General Electric’s records containing subprime mortgages from GE’s financial services business WMC Mortgage Corp.
On Friday, GE disclosed in its annual report, that its lending unit, GE Capital, and defunct subprime lending unit WMC, received the subpoenas in January.
According to Reuters:
The conglomerate said it learned in December that the department was probing purchase or sale of residential mortgage loans between Jan. 1, 2005 and Dec. 31, 2007.
"We will cooperate with the Justice Department's investigation, which is at an early stage," GE said in a filing on Friday.
According to the DOJ’s investigation, currently there are 14 lawsuits relating to pending mortgage loan repurchase claims with WMC.
Five cases are pending in the U.S. District Court for the District of Connecticut, in four of those cases Deutsche Bank National Trust Company assert claims on approximately $4,300 million of mortgage loans and seek to recover damages in excess of approximately $1,800 million. The Law Debenture Trust Company of New York is the adverse in one case. It asserts claims on approximately $800 million of mortgage loans, and alleges losses on these loans in excess of approximately $425 million.
Four cases are currently pending with the U.S. District Court of Minnesota against U.S. Bank, one of which was initiated by WMC seeking declaratory judgment. It involves claims on approximately $800 million of mortgage loans and do not specify the amount of damages sought.
Four cases are pending in New York State Supreme Court. These cases involve claims worth approximately $4,559 million of mortgage loans.
The amounts of the claims at issue in these cases reflect the purchase price or unpaid principal balances of the mortgage loans at issue at the time of purchase and do not give effect to pay downs, accrued interest or fees, or potential recoveries based upon the underlying collateral.
All of the mortgage loans involved in these lawsuits are included in WMC's reported claims at Dec. 31, 2015.
Last year, GE focused on selling off most of its finance and lending operations to refocus on industrial businesses.