FHFA Sues UBS For Misrepresenting RMBS Risk

On July 27, 2011, Fannie Mae and Freddie Mac’s regulator, the Federal Housing Finance Agency, sued UBS and several of its executives in New York federal court under Sections 11, 12(a)(2), and 15 of the Securities Act of 1933. The complaint alleges that between September 2005 and August 2007, Fannie Mae and Freddie Mac purchased over $4.5 billion in RMBS from UBS in connection with 16 different securitizations. Plaintiff claims that the RMBS registration statements, which contained loan and origination information, contained materially false statements regarding the quality of the mortgages in the securitizations, and the complaint focuses specifically on alleged borrower fraud and faulty underwriting practices. Complaint.