Feds: 'Crappy-MBS' Peddler Unloaded $4.5B In Smelly Paper On Unwitting Fannie, Freddie; Suit Seeks $900M+ Loss Recovery; More Actions Planned

From the Office of the Federal Housing Finance Agency:

• The Federal Housing Finance Agency (FHFA), as conservator for Fannie Mae and Freddie Mac (the Enterprises), has filed a lawsuit [...] against UBS Americas, Inc., and related defendants alleging violations of federal securities laws in the sale of residential private-label mortgage-backed securities (MBS) to the Enterprises. FHFA seeks to recover losses and damages sustained by the Enterprises as a result of their investments in UBS Securities.



• The lawsuit alleges that UBS Americas made numerous material misstatements and omissions about the mortgage loans underlying the private-label MBS, including the creditworthiness of the borrowers and the quality of the origination and underwriting practices used to evaluate and approve such loans. The defendants also failed to conduct adequate due diligence.



• This lawsuit seeks to recoup the losses suffered by the Enterprises related to their $4.5 billion investment in securities sold by UBS.

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• "FHFA is taking this action consistent with our responsibilities as conservator of each Enterprise," said FHFA Acting Director Edward J. DeMarco. "From the issuance of 64 subpoenas last year to the filing of this lawsuit and further actions to come, we continue to seek redress for the losses suffered by the Enterprises."(1)

For the FHFA press release, see FHFA Sues UBS to Recover Losses to Fannie Mae and Freddie Mac.

See also, Reuters: Fannie/Freddie regulator sues UBS on $900 million loss.

For the 102-page lawsuit, see Federal Housing Finance Agency v. UBS Americas, Inc., et. al.

(1) The FHFA appears to be following the lead of its sister agency, the National Credit Union Administration (the federal regulator that oversees creit unions), in bringing civil lawsuits over the crappy, mortgage-backed investments that were unloaded on them (and, by extension, the U.S. taxpayer). See Feds' Campaign Tagging Banksters With Allegations Over Crappy Mortgage-Backed Paper That Led To Credit Union Failures Continues; More Lawsuits Planned.