Categorized | Finance and Mortgage

Fannie Mae and Freddie Mac May Finally Reach Settlement with SEC

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For the last year threes, mortgage giants Fannie Mae and Freddie Mac have been the subjects of an SEC investigation regarding questions as to whether they provided sufficient disclosures regarding the number of subprime loans that they backed.

In the potential settlement agreement, Fannie Mae and Freddie Mac would both admit that they had a major role in the rise and fall of the United States real estate market. They would face no criminal charges or fines as part of the settlement. However, the settlement, if agreed upon, will put them in a difficult position, as it was only last week that the government, acting on behalf of the two companies, sued seventeen of the biggest financial firms for deceptive practices leading up to the real estate meltdown.

In an essence, everybody that was at least somewhat involved with the real estate crash continues to point fingers at everybody else in an effort to avert the ramifications of being blamed for the crash. If the two mortgage giants agree to the settlement, it may cause their own lawsuit to be null and void, as they would have admitted to a primary role in causing the crash to take place.

While some experts have called for those who had been top-ranking officials for both companies during the real estate crash to be prosecuted, the criminal inquiries that once were part of the investigation have since ended. Instead, the SEC has directed its focus at the disclosures provided by the two companies to their shareholders. It is believed that both companies purposefully minimized their numbers to mislead their investors.

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About Drew Wilson

Drew focuses on the Commercial and Mortgage/Finance categories.

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