US Weighs Lawsuits on Alleged Insurance Kickbacks.

Source: nyt/ap

The government is considering whether to sue banks and other mortgage servicers to recover its losses from alleged insurance kickbacks that may have cost government-controlled mortgage giants Fannie Mae and Freddie Mac hundreds of millions of dollars, The Associated Press has learned.

The Federal Housing Finance Agency, which is responsible for guarding Fannie and Freddie's finances, told its inspector general's office in a letter obtained by the AP that it will consider filing the lawsuits and will make a formal decision over the next year.

Fannie Mae and Freddie Mac, which have been under the FHFA's conservatorship since 2008, lost an estimated $168 million from the fees in 2012 alone, according to the report by the FHFA's inspector general. The FHFA didn't accept the inspector general's estimate of damages, but the agency's official response to the report said it "does not object" to the recommendation that it consider suing. . .

Though the FHFA barred banks and other mortgage servicers from collecting payments from insurers on June 1, the agency does not normally discuss prospective litigation and has not previously indicated that it might consider suing over past misbehavior.


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