The SEC is taking aim at a former Fannie Mae executive who may have misled investors into thinking that the GSE had “far less exposure” to risky loans between 2006 and 2008 than was actually the case. Former CEO Dan Mudd and two other defendants are facing charges of “creating materially false and misleading statements regarding Fannie Mae’s exposure to subprime and Alt-A loans.” At one point in 2007, Mudd allowed a public filing that claimed $4.8 billion of business in subprime loans while, in reality, the number of “Expanded Approval” (EA) loans – loans that target borrowers with weak credit histories – made up $43.3 billion of Fannie Mae’s business at that time.
Mudd’s attorney has stated publicly via email that “nearly all” of the allegations are false and has said that “this is a shameful case”. He insists the “defense will prevail.”
Do you believe that Mudd could have made a nearly $40-billion error?
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Category: Real Estate