“The brazen attitude exhibited by Wall Street traders toward public institutional buyers of GSE bonds was shocking,” the lead plaintiff says.
A Treasury Department plan would recapitalize Fannie Mae and Freddie Mac and return them to private control.
The companies are in their eleventh year of conservatorship following the financial crisis.
The government says the TBW financials audited by Deloitte failed to reflect the mortgage originator's "severe financial distress."
The writedown will require the mortgage giant to seek a $3.7 billion cash infusion from the Treasury, its first draw since 2012.
How Bryan Sullivan, previously a PIMCO portfolio manager, uses that experience as the finance chief of loanDepot.
'The creation of jobs added at a steady clip and the prospect of higher mortgage rates and home prices ... is encouraging more households to buy.'
The FHFA said two-thirds of the mortgage loans underlying securities the banks sold had underwriting defects.
The lawsuit accused Freddie Mac executives of misleading investors about the amount of subprime housing loans on the GSE's books.
Future profitability of the government-sponsored enterprises is far from assured, says an inspector general report.
While housing finance needs fixing, "simply returning [the GSEs] to the way they were before" is neither practical nor realistic, says a Treasury adviser.
But a reduction in the corporate rate would also cut the deferred tax assets — and the net worth — of some companies.
