MINNEAPOLIS, Nov. 27, 2007 LAWFUEL – The Legal Newswire — Charles H. Johnson & Associates announces that a class action has been commenced in the United States District Court for the Southern District of New York on behalf of purchasers of Federal Home Loan Mortgage Corporation (“Freddie Mac” or the “Company”) (NYSE:FRE) publicly traded securities during the period August 1, 2006 through November 19, 2007 (the “Class Period”).
If you are a member of the proposed Class, you may move the Court to serve as a lead plaintiff for the Class on or before January 21, 2008.
You do not need to be a lead plaintiff in order to share in any recovery that may be obtained.
The Complaint alleges that during the Class Period, Defendants made false and misleading statements concerning Freddie Mac’s business, its risk management and the procedures it put in place to protect the Company from problems in the mortgage industry. During the Class Period, Freddie Mac was not adequately implementing risk control measures. The Company’s procedures for appraisals led to many inflated appraisals, increasing the risk of defaults. Ultimately, the Company reported billions of dollars in losses, has been mentioned in investigations by the New York Attorney General and announced it must raise new capital to meet regulatory requirements. On this news, Freddie Mac stock fell over $10 per share to close at $26.74 on November 20, 2007.
During the Class Period, Defendants concealed the following information, which caused their statements to be materially false and
misleading: 1) Defendants were not implementing sufficient risk management controls to protect the Company from acquiring billions of dollars worth of mortgages with poor underwriting standards, causing the Company to have an unsustainable amount of risky loans; 2) Defendants were not implementing controls to ensure that appraisals were done appropriately and to prevent collusion between lenders and appraisers, increasing the risk of defaults; 3) the Company was not adequately reserving for uncollectible loans, causing its financial results to be misleading; and 4) the Company had billions of dollars of bad loans which it would eventually have to write off, causing losses and capital deficiencies.
If you purchased Federal Home Loan Mortgage Corporation securities during the Class Period, or have any questions concerning this notice or your rights with respect to this matter, please contact:
Neal Eisenbraun, Esq. ([email protected]) Charles H. Johnson & Associates
2599 Mississippi Street
New Brighton, MN 55112