U.S. Government Sues UBS for $900 Million, Charging Mortgage Fraud

Saturday, July 30, 2011
The Federal Housing Finance Agency (FHFA), overseer of Fannie Mae and Freddie Mac, is suing UBS to recover nearly a billion dollars in losses stemming from the mortgage crisis, claiming the Swiss bank committed fraud.
FHFA says Fannie and Freddie suffered more than $900 million in losses after UBS misled the government-sponsored enterprises into buying $4.5 billion of risky mortgage debt. UBS is accused of hiding or misstating the quality of the underlying loans and underwriting, as well as borrowers’ ability to make payments, among other transgressions.
In announcing the lawsuit, FHFA made it clear that it intends to go after other major banks to recover losses from bad mortgages that crippled Fannie and Freddie, forcing the U.S. government to spend $135 billion to rescue them.
In addition to FHFA, the Federal Housing Administration (FHA) is also pursuing banks over bad mortgages. In May FHA filed a fraud lawsuit against Deutsche Bank for misleading the agency into believing many low-quality mortgages issued by the German bank qualified for insurance.
-Noel Brinkerhoff
On UBS and the FHFA Lawsuit (by Bruce Krasting)
Fannie/Freddie Regulator Sues UBS on $900 Million Loss (by Jonathan Stempel, RealClearMarkets)
Fannie & Freddie Sue UBS for $900 Million (by Dan McCue, Courthouse News Service)


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