Friday, October 07, 2011

House Oversight Chair Requests Documents on FHFA Litigation against Financial Institutions over Sale of Mortgage-Backed Securities

House Oversight Committee Chair Darrell Issa (R-CA) has written a letter to the Federal Housing Finance Agency requesting documents involving lawsuits the agency has filed against financial institutions over the sale of mortgage-backed securities to Fannie Mae and Freddie Mac. The lawsuits seek to recoup some portion of the losses the GSEs incurred on private label mortgage-backed securities that are attributable to misrepresentations and other improper actions by the financial institutions.

The agency is asked to provide an explanation of its decision to seek outside counsel to pursue the litigation against the financial institutions, including a detailed description of the decision-making process by which the agency concluded that it required outside counsel to bring the lawsuits. Chairman Issa also wants to know if FHFA considered asking the Justice Department to file the lawsuits and, if yes, why DOJ declined and, if no, a detailed explanation of why not. More broadly, the letter requests all documents and communications between FHFA and the DOJ regarding litigation against financial institutions over mortgage-backed securities.