Ohio AG Considers Fannie Mae Case

NEW YORK (Reuters) – The attorney general of Ohio said on Wednesdayhis office was considering bringing a shareholder lawsuit againstmortgage buyer Fannie Mae over disclosures of subprime holdings.

Attorney General Marc Dann last month sued Freddie Mac, anothergovernment-sponsored housing enterprise, on behalf of the Ohio PublicEmployees Retirement System, contending it had engaged in securitiesfraud for failing to disclose risks from its investments in thesubprime mortgage market.

"We are looking at Fannie as well," Dann said at the Reuters Housing Summit in New York.

"It appears that they also failed to advise their shareholders of the extent of their subprime holdings," he said.

A Fannie Mae spokeswoman said the mortgage entity does not comment on proposed litigation.

Ohio already is pursuing a pending shareholder lawsuit againstFannie Mae related to past accounting issues, alleging that itmanipulated earnings to artificially inflate its share price. That suitwas filed in 2004.

The Freddie Mac lawsuit was filed last month in U.S. District Courtfor the Northern District of Ohio. The complaint, brought against thecompany and its top executives, said the No. 2 U.S. home fundingcompany had improperly bought risky home loans that dropped in valueand led to big losses for Freddie Mac investors.

(Reporting by Martha Graybow; editing by Jeffrey Benkoe and Gerald E. McCormick)

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