District Court, Southern District of New York, No. The case is Federal Housing Finance Agency v. It accused UBS of failing to perform adequate due diligence on the underlying loans, and hiding or misstating the quality of the underwriting, the ability of borrowers to make payments and the frequency with which borrowers occupied their homes.Ĭote said the FHFA had plausibly alleged that the mortgage originators had “serially deviated” from their underwriting standards, with the result that statements in the securities offering materials that UBS provided were false.
In its case against UBS, the FHFA sought to recover Fannie Mae’s and Freddie Mac’s losses on debt that the Swiss bank sold in 22 securitizations from September 2005 to August 2007. FHFA director Edward DeMarco is trying to recoup some of those losses and minimize future losses.
#MAC AMBIFY MAC#
government has lost $151 billion on its investments in Fannie Mae and Freddie Mac since it seized the companies on Sept. housing slump, and were a large factor in the 2008 global financial crisis. Losses on the securities have been a major contributor to the five-year U.S. “A Securities Act defendant cannot simply claim that she blindly reported information given to her by third parties and thereby avoid liability for inaccuracies that made their way into the offering materials,” Cote wrote in a 66-page decision, referring to a 1933 federal securities law. It sought to hold UBS responsible for marketing the securities as being safer than they were. The FHFA, the conservator for Fannie Mae and Freddie Mac, said the government-sponsored enterprises lost more than $1.1 billion on the securities as more borrowers fell behind or went into foreclosure.
“It will give the FHFA a lot of confidence to pursue its cases, and make the banks very skittish.” “The court is essentially saying that banks do not get to plead ignorance when they had an obligation to provide information to investors,” said Kathleen Engel, a professor at Suffolk University Law School in Boston and co-author of “The Subprime Virus.” Cote’s decision is the first to consider a defendant bank’s motion to dismiss, and the judge’s reasoning may also be applied in the other cases. The case is one of 17 that the FHFA filed last year against banks over losses suffered by the housing finance giants on approximately $200 billion of mortgage debt. District Judge Denise Cote in Manhattan said on Friday that the Federal Housing Finance Agency may pursue claims that UBS violated federal securities laws by misleading Fannie Mae and Freddie Mac into buying $6.4 billion of subprime and other residential mortgage-backed securities.
0 kommentar(er)
