Freddie Mac Challenges $600M ResCap, FGIC Settlement

Law360, New York (August 16, 2013, 4:29 PM EDT) -- Freddie Mac asked a New York bankruptcy judge Friday to reject a settlement between Residential Capital LLC and Financial Guaranty Insurance Co. that would slash the bond insurer's claim from $5 billion to $596.5 million.

The mortgage giant said the settlement would terminate insurance policies guaranteeing the payment of principal and interest on mortgage-backed securities it holds that were issued or serviced by ResCap. Freddie Mac has also rebutted the settlement's finding that FGIC trustees discharged their fiduciary duties to FGIC beneficiaries.

“Their justification is just...
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