Federal regulators overseeing Fannie Mae and Freddie Mac said today they will seek to recoup losses from companies that securitized "private-label" subprime and Alt-A mortgage-backed securities in cases where they discover misrepresentations and breaches of warranty.

The Federal Housing Finance Agency said it has issued 64 subpoenas from unnamed companies to obtain loan documents that would shed light on whether such misrepresentations were made.

FHFA said it’s seeking the contents of loan files, including documents used in the underwriting process such as loan applications and property appraisals. The subpoenas are part of an ongoing inquiry, which may lead to additional subpoenas.

Fannie and Freddie are generally considered to have been minor players in the subprime and Alt-A markets — together, they own or guarantee $5.5 trillion in mortgages, of which about $255 billion are private-label MBS. But those investments have accounted for a disproportionate share of the companies’ losses.

FHFA placed the companies in conservatorship in September 2008, in the wake of rising losses that threatened to jeopardize their ability to guarantee more loans.

Subprime and Alt-A lending was vastly curtailed when the secondary market for private-label MBS collapsed in late 2007. Through Fannie, Feddie, FHA, VA and USDA, the government now buys or guarantees 95 percent of all residential mortgages.

Fannie and Freddie financed or guaranteed more than 70 percent of single-family home purchases in 2009, up from 40 percent in 2006.

Loans guaranteed by the Federal Housing Administration (FHA), Department of Veterans Affairs (VA) and Department of Agriculture (USDA) accounted for another 25 percent of originations in 2009.

The Obama administration has said the government is prepared to stand behind the companies for at least three more years, and has postponed a decision about their fate until Congress passes legislation overhauling regulation of the financial system.

Show Comments Hide Comments

Comments

Sign up for Inman’s Morning Headlines
What you need to know to start your day with all the latest industry developments
By submitting your email address, you agree to receive marketing emails from Inman.
Success!
Thank you for subscribing to Morning Headlines.
Back to top
Network with CoStar, Redfin, Realogy, SERHANT., Divvy, and thousands more in-person at ICLV this October. Prices go up Sunday.Register Now×
Log in
If you created your account with Google or Facebook
Don't have an account?
Forgot your password?
No Problem

Simply enter the email address you used to create your account and click "Reset Password". You will receive additional instructions via email.

Forgot your username? If so please contact customer support at (510) 658-9252

Password Reset Confirmation

Password Reset Instructions have been sent to

Subscribe to The Weekender
Get the week's leading headlines delivered straight to your inbox.
Top headlines from around the real estate industry. Breaking news as it happens.
15 stories covering tech, special reports, video and opinion.
Unique features from hacker profiles to portal watch and video interviews.
Unique features from hacker profiles to portal watch and video interviews.
It looks like you’re already a Select Member!
To subscribe to exclusive newsletters, visit your email preferences in the account settings.
Up-to-the-minute news and interviews in your inbox, ticket discounts for Inman events and more
1-Step CheckoutPay with a credit card
By continuing, you agree to Inman’s Terms of Use and Privacy Policy.

You will be charged . Your subscription will automatically renew for on . For more details on our payment terms and how to cancel, click here.

Interested in a group subscription?
Finish setting up your subscription