Fannie Mae 2007 Annual Report Download - page 61

Antitrust Lawsuits
In re G-Fees Antitrust Litigation
Since January 18, 2005, we have been served with 11 proposed class action complaints filed by single-family
borrowers that allege that we and Freddie Mac violated federal and state antitrust and consumer protection
statutes by agreeing to artificially fix, raise, maintain or stabilize the price of our and Freddie Mac’s guaranty
fees. Two of these cases were filed in state courts. The remaining cases were filed in federal court. The two
state court actions were voluntarily dismissed. The federal court actions were consolidated in the U.S. District
Court for the District of Columbia. Plaintiffs filed a consolidated amended complaint on August 5, 2005.
Plaintiffs in the consolidated action seek to represent a class of consumers whose loans allegedly “contain a
guarantee fee set by” us or Freddie Mac between January 1, 2001 and the present. Plaintiffs seek unspecified
damages, treble damages, punitive damages, and declaratory and injunctive relief, as well as attorneys’ fees
and costs.
We and Freddie Mac filed a motion to dismiss on October 11, 2005, which remains pending.
We believe we have valid defenses to the claims in this lawsuit and intend to defend this lawsuit vigorously.
Escrow Litigation
Casa Orlando Apartments, Ltd., et al. v. Federal National Mortgage Association (formerly known as Medlock
Southwest Management Corp., et al. v. Federal National Mortgage Association)
A complaint was filed against us in the U.S. District Court for the Eastern District of Texas (Texarkana
Division) on June 2, 2004, in which plaintiffs purport to represent a class of multifamily borrowers whose
mortgages are insured under Sections 221(d)(3), 236 and other sections of the National Housing Act and are
held or serviced by us. The complaint identified as a proposed class low- and moderate-income apartment
building developers who maintained uninvested escrow accounts with us or our servicer. Plaintiffs Casa
Orlando Apartments, Ltd., Jasper Housing Development Company and the Porkolab Family Trust No. 1 allege
that we violated fiduciary obligations that they contend we owed to borrowers with respect to certain escrow
accounts and that we were unjustly enriched. In particular, plaintiffs contend that, starting in 1969, we misused
these escrow funds and are therefore liable for any economic benefit we received from the use of these funds.
Plaintiffs seek a return of any profits, with accrued interest, earned by us related to the escrow accounts at
issue, as well as attorneys’ fees and costs. Our motions to dismiss and for summary judgment with respect to
the statute of limitations were denied.
Plaintiffs filed an amended complaint on December 16, 2005. On January 3, 2006, plaintiffs filed a motion for
class certification, which remains pending.
We believe we have valid defenses to the claims in this lawsuit and intend to defend this lawsuit vigorously.
Investigation by the New York Attorney General
On November 6, 2007, the New York Attorney General’s Office issued a letter to us discussing that Office’s
investigation into appraisal practices in the mortgage industry. The letter also discussed a complaint filed by
the Attorney General’s Office against First American Corporation and its subsidiary eAppraiseIT alleging
inappropriate appraisal practices engaged in by First American and eAppraiseIT with respect to loans
appraised for Washington Mutual, Inc. We are cooperating with the Attorney General and have agreed to
appoint an independent examiner to review these matters. On November 7, 2007, the Attorney General’s
Office issued a subpoena to us regarding appraisals and valuations as they may relate to our mortgage
purchases and securitizations.
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