Federal Housing Finance Agency v. Countrywide Financial Corp.
900 F. Supp. 2d 1055
C.D. Cal.2012Background
- FHFA, as conservator of Fannie Mae and Freddie Mac, sues in federal court for misstatements in Countrywide-related RMBS Offering Documents.
- HERA (12 U.S.C. § 4617) created FHFA and allows the Director to place GSEs in conservatorship with rights transferred to FHFA.
- Between 2005–2008, Countrywide entities securitized RMBS; offerings included shelf registrations, prospectuses, and supplements (Offering Documents).
- FHFA asserts twelve counts under federal/state securities laws and common law for misstatements about occupancy rates, loan-to-value, and underwriting standards.
- Countrywide moves to dismiss as untimely under § 13 of the Securities Act and state-law statutes of repose/limitations; FHFA argues HERA extender statute applies.
- Court holds HERA extends both limitations and repose periods and applies to federal and state statutory claims, deeming FHFA claims timely.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does HERA extend statutes of repose as well as limitations? | FHFA: extender statute covers repose periods. | Countrywide: extender covers only limitations, not repose. | HERA extends both repose and limitation periods. |
| Does HERA apply to federal and state-law claims? | FHFA: extender applies to all claims brought by FHFA as conservator, including state-law claims. | Countrywide: extender limited to state-law claims with state-law applicability. | Extender applies to claims under federal and state law. |
| Does HERA apply to statutory (non-tort/contract) claims? | FHFA: extender covers any action under FHFA's purview, including statutory claims. | Countrywide: extender limited to contract/tort claims. | HERA applies to statutory claims as well. |
| Are FHFA’s claims timely under the extender and discovery framework? | FHFA: claims live as of 9/6/2008 and extended at least to 9/6/2011; discovery issues discussed but timely. | Countrywide: many claims time-barred under traditional statutes; limited certificates outside 2005 shelf filings untimely. | Claims timely; 24 pre-2005 shelf-related claims dismissed; remaining claims timely. |
Key Cases Cited
- McDonald v. Sun Oil Co., 548 F.3d 774 (9th Cir. 2008) (statute of limitations vs. repose context; ambiguity may extend to repose)
- In re WorldCom Sec. Litig., 496 F.3d 245 (2d Cir. 2007) (describes one- and three-year limitations under securities acts)
- Jones v. Saxon Mortg., Inc., 537 F.3d 320 (4th Cir. 2008) (statutory time limits; repose referenced in discussion of limitations)