The short form is that there is a currently-active Qui Tam (false claims) lawsuit in Nevada that makes the following assertion:
Each of the defendants who was the transferor to Fannie Mae and Freddie Mac made, caused to be made or used a false statement in Declaration of Value Forms related to the transfer of property to Fannie Mae by way of Trustee's Deed upon Sale, Corporation Grant Deed or other Deed to avoid payment of transfer taxes in each instance, and Fannie Mae used those false records and/or statements to conceal and/or avoid its obligations to payor transmit money owed to the State for payment of taxes upon the conveyance or transfer of title to real estate in the State by intentionally misrepresenting to the State that defendant Fannie Mae or Freddie Mac was a government agency exempt from conveyance or transfer taxes.
This has an interesting twist to it. As Zerohedge pointed out, there is a "blow your own brains out" problem no matter which way the case goes.
If the plaintiffs lose, that is, it is found that the corporations were government instrumentalities, then their S-1 originally and their quarterly reports and other statements forward from there were all falsely-filed, asserting that Fannie and Freddie are in fact corporations. In this case the US Treasury is likely on the hook for the loss in shareholder value and will almost-certainly get instantly sued, and further, so will the principals involved in the deception. While the US Government may avoid liability under sovereign immunity, the individual actors are potentially exposed on a personal level due to the fact that they violated that which is clearly set forth in the Congressional Record with regard to the disgorgement of Fannie from Federal Control and the creation of Freddie as a private, for-profit corporation. That is, the qualified personal immunity of a government actor only extends as far as their statutorily-provided mandate and duties. Step beyond that boundary and you can be held personally responsible.
If the plaintiffs win, then there's another problem - every state that has a similar Qui Tam statute is likely to see a copycat filing and the amount of money involved here is enormous, as the majority of mortgages sold and transferred during these years were in fact through Fannie and Freddie. We're talking about, collectively, hundreds of billions of dollars in actual damages.
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