Investment group files case against U.S. over Fannie, Freddie bailout terms

By IVCPOST Staff Reporter

Jul 13, 2013 01:34 AM EDT

A group of investors in Perry Capital LLC filed a case against the US Treasury last Sunday. The group challenged the 2012 changes of the bailout terms set for Fannie Mae and Freddie Mac, mortgage companies owned by the government.

The filed lawsuit in the US District Court in Washington alleged that the Treasury and Fannie Mar and Freddie Mac regulator violated a 2008 law. The said law was infringed after the mortgage firms were held into conservatorship. The move was taken after facing insolvency at the height of the US financial crisis.

Last year, the Treasury Department made amendments in the terms of the bailout set for Fannie Mae and Freddie Mac. This forced the mortgage companies to hand over their profits to the government. This replaced the required quarterly dividends of 10% paid by the company.

The suit was filed against the Treasury and the Federal Housing Finance Agency (FHFA), the regulator for Fannie Mae and Freddie Mac. The questioned bailout agreement provided no mechanism for the firms to repay the US$187.5 billion debt they owe the government from their 2008 bailout.

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