Fannie Mae-No Politics (FNMA)

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Uncle Sam Sours on Frannie Suit

By
John Carney

Can you sue the government for taking your property a year before you even owned it? Investors in Fannie Mae and Freddie Mac may soon discover the answer.

The U.S. government launched a new line of attack on Friday in its legal battle with investors in the mortgage giants. It asked the U.S. Court of Federal Claims to dismiss the lawsuit filed by Fairholme Funds on the grounds that the latter purchased its shares after the government had arranged in 2012 to sweep essentially all of Fannie’s and Freddie’s profits.

Fairholme’s suit claims that this deprived shareholders of their property rights. But Fairholme didn’t make its initial purchase of Fannie or Freddie shares until 2013, according to court documents filed Friday. The government points to a 2010 case where a federal appeals court ruled that a developer couldn’t sue over an environmental regulation because it bought the relevant land after the Environment Protection Agency’s decision–effectively closing the property–was made. The subsequent owner didn’t inherit the claim against the government.

If the Claims Court agrees, investors who purchased shares after 2012 could find themselves crying over the equivalent of expired milk.


http://blogs.wsj.com/moneybeat/2015/06/08/uncle-sam-sours-on-frannie-suit/?mod=yahoo_hs