Real Estate & Property Law
Ohio AG Sues Freddie Mac for Housing Fraud
Posted Jan 23, 2008, 03:20 pm CDT
By Martha Neil
Contending that one of the nation's mortgage finance giants is responsible for a massive national housing fraud, the Ohio attorney general has filed a federal securities class action suit against Freddie Mac on behalf of a pension fund.
The federally chartered private company "secretly and intentionally participated in one of the largest housing investment deceptions in modern U.S. economic times," the lawsuit contends. It seeks damages on behalf of the Ohio Public Employees Retirement System and all other purchasers of Freddie Mac stock between Aug. 1, 2006 and Nov. 23, 2007, Reuters reports.
Specifically, the suit contends that Freddie Mac concealed from its own investors the risks associated with its heavy subprime mortgage portfolio. They then suffered extensive losses after the stock nosedived in November after news that Freddie Mac had sustained $2 billion in losses as part of a nationwide foreclosure crisis apparently sparked by risky lending, according to the Columbus Dispatch.
Freddie Mac shares were trading at a little over $31 Wednesday, compared to as much as $60 at one point last year. Attorney General Marc Dann contends that the pension fund lost up to $27.2 million because of the subprime mortgage debacle.
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