UBS Leads Wall Street Bid to Halt FHFA Mortgage-Bond Suit


UBS is seeking to block a U.S. lawsuit over billions of dollars in mortgage bonds in a case that could set back government efforts to recover losses Fannie Mae and Freddie Mac incurred in the housing crisis.

Bloomberg reports that UBS is set Monday to argue that the U.S. Court of Appeals in Manhattan should overturn a lower-court ruling allowing the Federal Housing Finance Agency to pursue its lawsuit over losses on $6.4bn in mortgage bonds sold to the two mortgage-finance companies.

At issue on appeal is whether the 2008 law that established the agency, which regulates Fannie Mae and Freddie Mac, also extended the time the government had to file claims against Zurich-based UBS and a group of other lenders.

'It’s highly politicized', said Dan Flanigan, chairman of the financial services and real estate practices at law firm Polsinelli Shughart. 'There will be huge pressure on all these courts - not that they’ll be able to acknowledge - but huge political pressure not to let these banks off the hook'.

The FHFA sued UBS and more than a dozen other banks, including JPMorgan Chase & Co. (JPM), Barclays Plc (BARC) and Goldman Sachs Group Inc. (GS), over mortgage securities sold to Fannie Mae and Freddie Mac. Four years after the financial crisis, banks are still grappling with liability tied to mortgage lending as investors and government authorities pursue claims and negotiate settlements.

Hit the link below to access the complete Bloomberg article:

UBS Leads Wall Street Bid to Halt FHFA Mortgage-Bond Suit

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