We previously reported on the lawsuit the Federal Housing Finance Agency (“FHFA”) filed against the Swiss bank, UBS, for securities violations based on the bank’s alleged misrepresentations and fraud relating to residential mortgage-backed securities. Earlier this month, the Second Circuit ruled that the lawsuit can move forward.
District Court Judge, Denise Cote, had previously ruled that the FHFA filed suit within the applicable statute of limitations. The Second Circuit agreed and found that the statute, the Housing and Economic Recovery Act (“HERA”), which created the FHFA in September 2008, allowed the FHFA to bring lawsuits within three years of that date. The instant lawsuit was filed on July 27, 2011, within the three year time period.
The opinion stated:
Congress enacted HERA and created FHFA in response to the housing and economic crisis, precisely because it wanted to address the dire financial condition of Fannie Mae and Freddie Mac. As HERA makes clear, Congress intended FHFA to take action to “collect all obligations and money due” to the GSEs, to restore them to a “sound and solvent condition.” Congress obviously realized that it would take time for this new agency to mobilize and to consider whether it wished to bring any claims and, if so, where and how to do so. Congress enacted HERA’s extender statute to give FHFA the time to investigate and develop potential claims . . . and thus it provided for a period of at least three years from the commencement of a conservatorship to bring suit.