FHFA Sues HSBC Entities For RMBS Representation and Warranty Breaches

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Explore:  FHFA Freddie Mac Mortgages

On September 26, the Federal Housing Finance Agency (FHFA) brought an action against HSBC Finance Corp. in New York State court. FHFA’s summons with notice alleges that HSBC, as successor-in-interest to Decision One Mortgage Co., failed to repurchase residential mortgage loans underlying a Morgan Stanley ABS Capital I Inc. Trust. FHFA brings this action on behalf of the Federal Home Loan Mortgage Corporation (Freddie Mac), which purchased RMBS issued by the trust in September 2006. FHFA alleges that one or more of the underlying loans breached certain contractual representations and warranties made by Decision One concerning the underwriting and appraisal of the mortgage loans. FHFA seeks specific performance of HSBC’s repurchase obligation, damages, indemnification, and declaratory relief. Summons.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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