The federal regulator for mortgage giants Fannie Mae and Freddie Mac is preparing to sue some of the nation's largest banks over soured mortgage bonds in a bid to recoup billions of dollars in losses from the failed investments, according to people familiar with the matter.
The Federal Housing Finance Agency, which is charged with conserving the assets of the failed mortgage giants, could file the lawsuits in the coming days, these people said. The suits are likely to allege that mortgages that were securitized by Wall Street firms and other issuers misled investors about the quality of the loans.
The FHFA filed the first of what could be around one dozen lawsuits in July against UBS AG, seeking $900 million in damages. UBS, in a statement at the time, promised to "vigorously" defend against all charges in court.
The agency's acting director, Edward J. DeMarco, declined to discuss the lawsuits in an interview last week but said there were "more to come." An FHFA spokeswoman declined to comment on Thursday.
The FHFA issued
The inquiry has focused on the "private label" securities based on subprime and other risky loans that were originated by mortgage companies, packaged by Wall Street firms, and then sold to investors.
The suits come as the potential statute of limitations for the FHFA to take such actions draws near next week, according to people familiar with the matter. The FHFA placed Fannie and Freddie into conservatorship, a legal process similar to bankruptcy restructuring, three years ago on next Wednesday.
News of the filing deadline for the lawsuits was first reported Thursday night on the website of the New York Times.
