Federal District Court Allows Interlocutory Appeal of Challenge to FHFA MBS Suit

Freddie Mac Fannie Mae RMBS FHFA

On June 19, the U.S. District Court for the Southern District of New York granted defendants’ motion to certify an interlocutory appeal from a portion of the court’s earlier denial of their motion to dismiss as untimely the FHFA’s claims under the 1933 Securities Act. Fed. Hous. Fin. Agency v. UBS Americas, Inc., No. 11-5201, 2012 WL 2324486 (S.D.N.Y. June 19, 2012). On May 4, 2012, the court denied, in large part, the defendants’ motion to dismiss the FHFA’s claims alleging that billions of dollars of MBS purchased by Fannie Mae and Freddie Mac were based on offering documents that “contained materially false statements and omissions.” The suit was selected to proceed first among the 18 such suits brought by the FHFA. In this most recent decision, the court reasoned that resolution of issues relating to the timeliness of the claims will “remove a cloud of legal uncertainty that hangs over the other 17 actions in this suite of cases” by clarifying the impact of the Housing and Economic Recovery Act of 2008 on the statute of limitations in the Securities Act of 1933 and, as a consequence, defining the scope of discovery.