Daniel Mudd Opalesque Industry Update - Fortress Investment Group LLC was among over 400 financial firms which provided advisory proposals to federal housing authorities about how to handle renting out homes that have been foreclosed. The Federal Housing Finance Agency asked firms for ideas as it tries to stabilize neighborhoods and recoup losses in the wake of the national housing crisis.
The proposal from Fortress in notable as the firm’s chief executive officer, Daniel Mudd recently took a leave of absence after being sued by the SEC over his role as CEO Of Fannie Mae from 2005 to 2008. Fannie Mae and Freddie Mac issued subprime mortgages to individuals and played a significant role in the housing bubble that led to the crash. Fannie Mae and Freddie Mac were also seized by the federal government in 2008 to become part of the new Federal Housing Finance Agency.
Mudd stands accused of understanding the subprime loans held by Fannie Mae during his tenure. The SEC alleges that Mudd's figures were off by hundreds of billions of dollars. The complaint comes against Mudd and six other officials involved with Fannie Mae and Freddie Mac during the period just before the housing bubble burst in 2008.
Mudd contends that the government and investors were aware of the full extend of the loans held by Fannie Mae during his tenure.
Fortress has offered no comment other than the proposal submitted by the firm has nothing to do with Mudd, nor the complaint against him. Mudd received a Wells Notice from the SEC advising him that he was subject to a civil suit in May. Proposals were due to the Federal Housing Finance Agency by September 15, 2011.
See last week's press release: Fortress CEO Daniel Mudd to take leave of absence, Randal Nardone appointed interim CEO: Source