From the NY Post:
It’s the flip side of foreclosure fraud: Not only is the city fireman in danger of losing his home, he also might wind up with smaller retirement checks because his pension invested in home-mortgage-backed bonds that were bundled and sold off by banks during the real-estate bubble.
Pension funds, insurance companies, university endowments, charities, community banks and other investors are believed to be out hundreds of billions of dollars because of the mess big banks made of the housing market.
Although lawsuits against banks are mounting, the disputes over the almost $1 trillion in mortgage securities may take years to resolve — and most investors are likely to wind up with only cents on the dollar.
“It comes out of our pockets,” says Peter Henning, a Wayne State University law professor and securities-law expert. “No one reached into your wallet and took out cash, but it impacts all of us. If you’re a mutual-fund holder with a bond fund, you’ve probably taken a hit. Insurance companies have losses, and that cost has to get passed on.”
Investors are getting aggressive about getting money back, but they recognize that only a small amount might get recovered, says Steve Toll, a partner at law firm Cohen Milstein, lead counsel in eight class-action lawsuits over mortgage-backed securities.
“We’re trying to get as much as we can for investors, but there’s never enough money to go around,” he says.