Freddie Mac Sued By Shareholder; Class Action Status Sought

Reuters reports:

• A shareholder sued Freddie Mac, its chief executive and others on Wednesday, alleging the No. 2 U.S. home funding company did not take adequate steps to protect itself from problems in the mortgage industry. Scott Reimer, a shareholder, said in the complaint filed in U.S. District Court in Manhattan that Freddie Mac, Chief Executive Richard Syron and some other executives did not adequately implement risk control measures to protect the company from acquiring billions of dollars worth of mortgages with poor underwriting standards. "Moreover, the company's procedures for appraisals led to many inflated appraisals, increasing the risk of defaults," it said. "Ultimately, the company has reported billions of dollars in losses, has been mentioned in investigations by the New York attorney general and announced it must raise new capital to meet regulatory requirements."

The suit seeks class action status. For more, see Freddie Mac sued over mortgage problems.

See also, News Gets Worse for Freddie As Shareholders File Lawsuit (Mortgage Firm Accused of Deception on Risk) (The Washington Post).