InfoBytes, July 16, 2010 - Weekly In-depth review of news & developments in the financial services industry

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Topics In This Issue

• Federal Issues

• State Issues

• Courts

• Firm News

• Mortgages

• Banking

• Consumer Finance

• Securities

• Insurance

• Litigation

Excerpt from "Federal Issues"

FHFA Issues 64 Subpoenas for Documents Related to Private-label Mortgage-backed Securities. On July 12, the Federal Housing Finance Agency (FHFA), acting in its capacity as the conservator of Fannie Mae and Freddie Mac, announced that it had issued 64 subpoenas to trustees and servicers holding or controlling documentation pertaining to private-label mortgage-backed securities (PLS) in which Fannie Mae and Freddie Mac invested. The subpoenas seek the contents of loan files, including loan applications, appraisals, and other documents used in the underwriting process, which secure the PLS. The FHFA indicated that it will analyze these documents to assess whether PLS counterparties made misrepresentations, breached warranties, or committed other acts or omissions that would require repurchase of loans underlying the PLS or other appropriate remedies. The FHFA characterized this matter as a “financial inquiry” and stated that it was premature to speculate as to whether it would bring lawsuits based on the information obtained. The FHFA also indicated that it may expand its inquiry beyond the scope of the present subpoenas. The subpoenaed parties have 30 days from receipt of the subpoena to produce all applicable documents.

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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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