, the federal judge in New York has rescinded the bid filed by
) regarding the dismissal of claims under a lawsuit charged
against it and other major financial institutions. The lawsuit,
filed by the Federal Housing Finance Agency (FHFA), accused the
banks of misrepresenting documents related to mortgage-backed
securities to Fannie Mae and Freddie Mac. FHFA was appointed as
conservator of the mortgage investors in 2008.
BANK OF AMER CP (BAC): Free Stock Analysis
CITIGROUP INC (C): Free Stock Analysis Report
JPMORGAN CHASE (JPM): Free Stock Analysis
UBS AG (UBS): Free Stock Analysis Report
To read this article on Zacks.com click here.
Though UBS AG argued the lawsuit was filed too late under the
federal law, the court's ruling confirmed that the Housing and
Economic Recovery Act of 2008 increased the filing period for
UBS AG has been accused of selling risky residential
mortgage-backed securities worth $6.4 billion from Sep 2005
through Aug 2007. Therefore, the 2nd U.S. Circuit Court of
Appeals has ordered the FHFA to pursue further proceedings over
its claims against UBS AG.
In Mar 2013, a joint petition was filed with the 2nd U.S. Circuit
Court of Appeals in New York by 15 leading banks, which were
dragged to court by the FHFA over the sale of perilous mortgage
debt. The petition was filed as the banks alleged unfair handling
of the litigation by the trial court judge.
The banks accused the U.S. District Judge Denise Cote of
deliberately holding back evidence with which the latter could
have pleaded their case. The banks also blamed Cote of issuing
filings that were aimed at compelling settlements. Therefore, the
banks have sought the help of the Appeals Court to give the
lawsuit a fair chance.
The banks including UBS AG,
JPMorgan Chase & Co.
Bank of America Corporation
) had come with the demand of reversal of the judge's rulings and
requested access to information that Fannie Mae and Freddie Mac
had before they obtained the risky loans (prior to the 2008
FHFA had filed the lawsuits in 2011, accusing the banks of
selling faulty securities worth $200 billion, to Fannie Mae and
Freddie Mac through misleading statements, which violated the
securities laws. Out of the 18 lawsuits the FHFA filed, 16 were
transferred to Judge Cote in Dec 2011.
The regulators are proactively trying to recover losses through
lawsuits against banks that were involved in malpractices related
to the selling of mortgage-backed securities. The continuously
increasing number of lawsuits will dent the banks' reputation and
financials. However, the investors, who were duped through such
investments, should feel relieved.
Shares of UBS AG currently retain a Zacks Rank #5 (Strong