http://www.businessweek.com/news/2010-03-05/fannie-freddie-may-ask-banks-to-eat-21-billion-of-sour-loans.html
There's more than one way to skin a fat cat
Banks that sell mortgages to Fannie Mae and Freddie Mac have to provide “representations and warranties” assuring that the loans conformed to the agencies’ standards. With more loans going bad, the agencies are demanding that banks turn over loan files, so they can scour the records for missing documentation, inaccurate data and fraud.
Providing Proof
The most common include inflated appraisals or falsely stated incomes in the loan applications, said Larry Platt, a Washington-based partner at law firm K&L Gates LLP who specializes in mortgage-purchase agreements. The government agencies hire their own reviewers who go back and compare the appraisals with prices from historical home sales, he said.
“They may do a drive-by for a visual inspection,” he said
