FHFA Action Against Countrywide Deemed Timely

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On October 18, Judge Mariana R. Pfaelzer of the Central District of California denied Countrywide’s motion to dismiss an action brought by the Federal Housing Finance Authority seeking relief in connection with purchases by Fannie Mae and Freddie Mac of more than $26.6 billion in RMBS. Countrywide argued that the claims were barred by the statute of limitations. Judge Pfaelzer held otherwise, finding that the Housing and Economic Recovery Act of 2008 (HERA) extended the relevant statutes of repose for claims brought by the FHFA beyond the period of repose ordinarily provided by federal, Virginia and Washington, D.C. securities laws. Certain former Countrywide officers and directors also sought dismissal on personal jurisdiction grounds, claiming that they lacked sufficient contacts to Virginia and Washington, D.C. to subject them to those respective securities laws. Judge Pfaelzer found that the act of marketing the RMBS in question to these jurisdictions, along with the fact that the plaintiffs were residents of Virginia and Washington, D.C., was sufficient to create the necessary contacts to convey jurisdiction over the individual defendants. Order.