Court Forces Government to Release Documents in Fannie/Freddie Suit
Court Forces Government to Release Documents in Fannie/Freddie Suit
Submitted by Carl Horowitz on Fri, 07/25/2014 - 14:50
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The burden carried by the holders of stock in mortgage giants Fannie Mae and Freddie Mac, each operating for nearly six years under federal conservatorship, just got lighter. On July 16, U.S. Court of Federal Claims Judge Margaret Sweeney, in a procedural ruling, held that shareholder-plaintiffs in Fairholme Funds Inc. et al. v. United States are entitled to know material facts that the government wants to keep secret. The shareholders are seeking compensation for foregone income resulting from the Treasury Department's "sweep" rule of August 2012, which forced the companies to forward all dividends to the department in perpetuity. Government lawyers had filed a motion for a protective order on May 30to inhibit discovery. The outcome of this case will have major implications for the future of property rights in this country.
National Legal and Policy Center has been following the situation at the Washington, D.C.-based Federal National Mortgage Association ("Fannie Mae") and the McLean, Va.-based Federal Home Loan Mortgage Corporation ("Freddie Mac") following the federal takeover of the two publicly-traded companies in September 2008. The nation's financial services industry at the time was in free fall. House prices were plummeting. Defaults and foreclosures were on the rise. And Fannie Mae and Freddie Mac, which now guarantee or hold a combined $5 trillion in U.S. residential mortgages - almost half of outstanding loan volume - had become dangerously undercapitalized. There was a real danger that the holders of their bonds, known as mortgage-backed securities, would not be repaid. An independent federal regulatory agency created by Congress that summer, the Federal Housing Finance Agency (FHFA), used its authority several weeks later to seize the companies and place them under Less
Submitted by Carl Horowitz on Fri, 07/25/2014 - 14:50
Printer-friendlyPrinter-
The burden carried by the holders of stock in mortgage giants Fannie Mae and Freddie Mac, each operating for nearly six years under federal conservatorship, just got lighter. On July 16, U.S. Court of Federal Claims Judge Margaret Sweeney, in a procedural ruling, held that shareholder-plaintiffs in Fairholme Funds Inc. et al. v. United States are entitled to know material facts that the government wants to keep secret. The shareholders are seeking compensation for foregone income resulting from the Treasury Department's "sweep" rule of August 2012, which forced the companies to forward all dividends to the department in perpetuity. Government lawyers had filed a motion for a protective order on May 30to inhibit discovery. The outcome of this case will have major implications for the future of property rights in this country.
National Legal and Policy Center has been following the situation at the Washington, D.C.-based Federal National Mortgage Association ("Fannie Mae") and the McLean, Va.-based Federal Home Loan Mortgage Corporation ("Freddie Mac") following the federal takeover of the two publicly-traded companies in September 2008. The nation's financial services industry at the time was in free fall. House prices were plummeting. Defaults and foreclosures were on the rise. And Fannie Mae and Freddie Mac, which now guarantee or hold a combined $5 trillion in U.S. residential mortgages - almost half of outstanding loan volume - had become dangerously undercapitalized. There was a real danger that the holders of their bonds, known as mortgage-backed securities, would not be repaid. An independent federal regulatory agency created by Congress that summer, the Federal Housing Finance Agency (FHFA), used its authority several weeks later to seize the companies and place them under Less
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