Fannie Mae-No Politics (FNMA)

[navycmdr]

Tony - SEPTEMBER 23, 2022 AT 3:48 PM

Dear ROLG or Tim: Any thoughts on the progress in Lamberth court? He recently put in his order on summary judgement denial and grants. It looks like we will be proceeding to trial, which is great. But the damages are what is in question. It seems the model which will be used for damages is under seal. Any thoughts on how that would be calculated if we prevail?
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J Barnes - SEPTEMBER 23, 2022 AT 5:10 PM

Great question Tony. I wish to add another: if trial is to start on Oct 17, when can we expect a court decision ?

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ruleoflawguy - SEPTEMBER 23, 2022 AT 6:30 PM - @Tony

almost all filings have been under seal, so there is not much anyone can say, other than Lamberth’s order today states that, as to remedies, recession and restitution are barred “as a matter of law”…these remedies would be preferred imo, and why he found them barred is sealed. I can say that FHFA’s motion for summary judgment, on the theory that SCOTUS’s opinion in Collins authorizes the NWS so that there can be no breach of implied covenant of fair dealing, apparently was denied…which is a big win for plaintiffs in being able to argue the merits…as to what damages a win on the merits will entitle plaintiffs, I simply cant tell from the filings and docket.

rolg
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Valuemonster - SEPTEMBER 23, 2022 AT 8:18 PM

ROLG,
I am no expert, and certainly no attorney, but you used the terms “recession” and “restitution” in terms of remedies. Understand the “restitution” model. Do NOT know “recession”.

Did you mean: What Are Rescission Damages? A judge may rule that a contract was unfair or misrepresented certain facts but choose not to nullify it. Instead, the judge may award monetary damages that must be paid by the offending party to the injured party.

Thought is was either “expectation(ary)” or “restitution” damage models.

Briefly what is “recession” model of damages, and if EITHER of these models are barred “as a matter of law” what damages model COULD be calculated IYO? If ‘Rescission” who would be the offending party? Fannie & Freddie or FHFA &/or Treasury?
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ruleoflawguy - SEPTEMBER 23, 2022 AT 8:29 P M

in short, rescission would invalidate the NWS. restitution would put Ps (all shareholders as well) where they would have been if no NWS had been adopted. this has been ruled out. the question I have is what if these named Ps win? I believe they get a personal award of money, forget for a moment how much, how calculated and who pays. what happens to the rest of the shareholders? well, perhaps they can bring some sort of class action claiming collateral estoppel (saying we should win too since were are similarly situated, same facts, same questions of law, no need for a full trial), and seek the same damage award for themselves as well…but there is such a thing as the statute of limitations (S/L) which has lapsed on this claim…but could a follow on action be brought by all of the other shareholders based upon a win in this Fairholme action? can all other shareholders follow on notwithstanding the S/L? not sure

rolg
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Valuemonster - SEPTEMBER 23, 2022 AT 9:07 PM

Be-Jesus. This has been addressed b4 and is somewhat of a ‘nightmare scenario.’

IYO is there a chance ONLY the NAMED Plaintiffs get ‘relief’, and everyone else is shafted b/c the S/L has expired? There are many who would jump off a bridge at such a prospect. There has been speculation that there were some very creative and well-versed lawsuits already brought and ‘paid off’ due to the Named-Plaintiff issue. Say it ain’t so……..

Was originally referring to speculation that damages would come from F&F, and not from FHFA/Treasury thereby actually making F&F ‘weaker’ through a direct hit to the Corporations’ Capital. That would be unfortunate since that would directly weaken F&F itself and by extension any Commons claim and the future stability of F&F. Again, say it ain’t so……

VM

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Golden Era For GSE Preferred (@DoNotLose) - SEPT 24, 2022 AT 9:55 AM

This is a class action. I don’t understand why you think that only the named P’s win something. the “genuine dispute of material fact remains on the fact of harm on the theory that plaintiffs’ shares lost much of their value, and in all other respects”

https://law.justia.com/cases/federal/district-courts/district-of-columbia/dcdce/1:2013cv01053/160910/82/

this stems from/ties to lamberth’s 2018 ruling: “For one thing, if Treasury withheld approval for a dividend to Plaintiffs under the original terms of the PSPAs, that available cash on hand would not simply be handed out to Treasury. One would expect that cash to increase the value of Plaintiffs’ underlying securities either by way of reinvestment into the company or reduction of debt. The Net Worth Sweep does exactly the opposite. It decreases the value of all securities other than the PSPAs by eliminating the possibility of profits accruing in any way to their benefit.”

I think that there are still compensatory / punitive damages on the table, but you’re the lawyer here.
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Soto - SEPTEMBER 24, 2022 AT 10:24 AM

I have a more basic question for ROLG or anyone similarly situated. When Lamberth uses the word “value” as in “shares lost much of their value”, is he referencing a specific and limited instance of transient share price (e.g., shares went from $x price to $y price and lost value)? Or, is he referring to a more general concept of the value of what the shares (i.e., contracts) represent, such as liquidation preference, place in the capital structure, etc.? Alternatively, perhaps it’s not so clear and this is something for the jury to decide. Thanks
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ruleoflawguy - SEPTEMBER 24, 2022 AT 10:54 AM

@donotlose

ok, 13-1288 is the class action, and it is consolidated with 13-1053 and 13-1349 (individual plaintiff cases). I had thought the class action was severed, but I now see that Lamberth’s order denying summary judgment applies to all three actions. so all three cases, including the class action, are consolidated and going to trial. sorry for the confusion.

so all preferred shareholders stand to win damages on a win on the merits.

@soto

again, since so much of what the parties have briefed and what Lamberth has decided and written is under seal, I dont know what Lamberth has held as to available damages.

Plaintiffs have alleged that the implied covenant breach has denied plaintiffs (all preferred shareholders) their ability to receive dividends and their liquidation preference, causing billions of dollars of damages.

rolg