Warren Buffett, who controls the biggest shareholding of the No. 1 U.S. mortgage lender, said banks were victimized by some homeowners who refinanced their loans before getting evicted.
“Large numbers of people who have ‘lost’ their house
through foreclosure have actually realized a profit because they
carried out refinancings earlier that gave them cash in excess
of their cost,” Buffett, chairman and chief executive officer
of Berkshire Hathaway Inc. (BRK/A), said Feb. 25 in his annual letter.
“In these cases, the evicted homeowner was the winner, and the
victim was the lender.”
Foreclosures have claimed about 5 million homes since the
property market began its slide in 2006. That has saddled
lenders like Bank of America Corp. with defaults, vacated
properties and lawsuits.
Berkshire, whose stake in Wells Fargo &
Co. (WFC), the largest U.S. mortgage lender, is valued at more than
$11 billion, invested $5 billion in Bank of America last year. (Continues here)