Hey Dad! I Wrecked the New Car - Will the Dealer Take it Back?

Well, if you can get away with it... It seems that there were clauses in many loan resale packages that allowed the buyers to sell them back to the banks if there were unusually fast default rates, fraud or other abnormalities.

In the Wall Street Journal article Investors Press Lenders on Bad Loans, we learn that many buyers of packaged troubled loans are forcing repurchase clauses on the banks to the tune of $935 million estimated by Countrywide alone.

Fannie Mae and Freddie Mac are reviewing loan defaults and attempting to force banks to repurchase, particularly where quality levels are low due to inflated appraisals, overstated borrower income and other misrepresentations. It seems fair to me, as the buyer didn't wreck the car, the dealer did in trying to get it off the lot.