Magazine article Mortgage Banking

Ohio AG Sues Freddie Mac over Subprime Mortgage Losses

Magazine article Mortgage Banking

Ohio AG Sues Freddie Mac over Subprime Mortgage Losses

Article excerpt

Ohio's attorney general announced in January he has filed a multimillion-dollar lawsuit against Freddie Mac, alleging the publicly traded GSE defrauded the state public employee pensioners by hiding billions in subprime mortgage lending losses.

In filing the securities fraud class-action lawsuit in federal court in Youngstown, Ohio, on behalf of the Ohio Public Employees Retirement System (OPERS), Attorney General Marc Dann said Freddie Mac "secretly and intentionally participated in one of the largest housing investment deceptions in modern U.S. economic times."

The lawsuit alleges that despite repeated public denials and assurances to the contrary, Freddie Mac was deeply invested in the subprime mortgage industry and failed to disclose that it was not protecting itself from the billion-dollar risks it incurred. OPERS losses as a result of the alleged fraud could be as high as $27.2 million, said Dann.

"By authorizing me to bring this suit on their behalf, they are protecting the interests of the pension plan, the workers and retirees who depend upon it, and the taxpayers whose hard-earned dollars fund it," said Dann. …

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