Class action lawsuit filed against Federal Housing Finance Agency and Treasury Department

By Noddy A. Fernandez | Aug 21, 2018

PHILADELPHIA — Shareholders have filed a class-action lawsuit against The Federal Housing Finance Agency (FHFA); Melvin I. Watt, the FHFA director, and the U.S. Treasury Department.

Wazzee Street Opportunities Fund IV LP, Douglas Whitley, and Lisa Brown, on behalf of themselves and all others similarly situated, filed a complaint on Aug. 16, in the U.S. District Court for the Eastern District of Pennsylvania, against the Federal Housing Finance Agency; Melvin I. Watt; and the U.S. Department of the Treasury for alleged violations of the separation of powers. 

The plaintiffs hold The Federal Housing Finance Agency; Melvin I. Watt; and the Department of the Treasury responsible because the defendants allegedly used their conservatorship and regulatory authority in an effort to unilaterally reform this vast sector of the economy to the disadvantage of the companies and their shareholders.

According to the complaint, since the 2008 execution and implementation of the Third Amendment to the Senior Preferred Stock Purchase Agreement has caused the expropriation of the companies' resources and private shareholders' rights, and its pursuit of housing-financing policies that disadvantage the companies and their shareholders, continue to harm plaintiffs and the class. 

The shareholders are owners of common stock issued by the Federal National Mortgage Association ("Fannie Mae" or "Fannie") and the Federal Home Loan Mortgage Corporation ("Freddie Mac" or "Freddie;" Fannie Mae and Freddie Mac together, the "Companies"). 

Since September 2008, when the FHFA exercised its regulatory authority to force Fannie and Freddie into conservatorship, FHFA has wielded plenary control over the companies' operations, the lawsuit claims. 

These ongoing injuries are being visited upon plaintiffs as a result of alleged decisions by FHFA as conservator and decisions by FHFA as regulator. 

The plaintiffs request a trial by jury and seek award of reasonable costs, including attorneys' fees incurred, and grant such other and further relief as the Court may deem just and proper. They are represented by Eric L. Zagar of Kessler Topaz Meltzer & Check, LLP in Radnor, Pennsylvania.

U.S. District Court for the Eastern District of Pennsylvania Case number 2:18-cv-03478-NIQA

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Kessler Topaz Meltzer & Check, Llp U.S. District Court for the Eastern District of Pennsylvania

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