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KLMNO WASHINGTON BUSINESS Firms subpoenaed in attempt to regain Fannie, Freddie losses by Zachary A. Goldfarb
A federal regulator subpoe- naed mortgage lenders and other companies for loan documents Monday in an effort to reclaim funds they may owe government- backed firms Fannie Mae and Freddie Mac. In the years of the housing boom, Fannie and Freddie bought hundreds of billions of dollars in investments known as private-label securities. Those se- curities often comprised sub- prime loans and other risky
mortgages. Fannie and Freddie insist that
they were sold billions of dollars of these loans on deceptive grounds — and that the compa- nies that sold them the loans should be held responsible for their heavy losses on them. But lenders and other firms
that did business with Fannie and Freddie don’t want to pay them for the losses. And they are resisting Fannie and Freddie’s ef- forts to obtain documents that would show whether the invest- ments were aboveboard. The Federal Housing Finance
Agency, which oversees Fannie and Freddie, is now getting into the mix, announcing Monday it has issued 64 subpoenas to firms for loan applications, property appraisals and other documents that would show whether Fannie and Freddie ought to be liable for losses on private-label securities. If the documents show they were misled into buying the se- curities, Fannie and Freddie could insist that firms buy back the troubled securities and pay for the losses. Such payments could then be used to reimburse the U.S. Treasury, which has
helped Fannie and Freddie stay afloat with $145 billion in tax- payer aid.
“By obtaining these docu- ments we can assess whether contractual violations or other breaches have taken place lead- ing to losses for the Enterprises and thus taxpayers,” the FHFA’s acting director, Edward J. De- Marco, said in a written state- ment. Fannie and Freddie together own about $255 billion in pri- vate-label securities. These secu- rities included subprime loans, which were extended to people
with thin or weak credit histo- ries, as well as exotic loans such as adjustable-rate mortgages known as option ARMs. Option ARMs allowed borrowers to treat their mortgages as credit ac- counts, paying a small minimum payment each month while their balance grew to an unsustain- able size. Later analysis has shown that
these types of loans were some- times made on fraudulent grounds — and that the compa- nies that packaged the loans and sold them to investors didn’t per- form the appropriate oversight
to ensure they were on the up- and-up. Freddie said in a recent reg-
ulatory filing that lenders owe it $4.8 billion, up 26 percent from three months earlier. The com- pany said a third of its demands to lenders for compensation have gone unfulfilled for three months. Fannie doesn’t disclose similar numbers. The FHFA declined to release the names of the companies be- ing served subpoenas. Some firms have gone bankrupt.
goldfarbz@washpost.com
TUESDAY, JULY 13, 2010
Northrop identifies headquarters building in Fairfax
Defense contractor plans to move by next summer
by Marjorie Censer
and Jonathan O’Connell Capital Business Staff Writers
Northrop Grumman an- nounced Monday that it has se- lected a 333,000-square-foot building near Falls Church for its new headquarters and will move there from Los Angeles by next summer. The announcement ends a six- month real estate search and ju- risdictional bidding war that ini- tially spanned Virginia, the Dis- trict and Maryland but quickly narrowed to Fairfax and Arling- ton counties. In late April, the de- fense contractor announced that it had selected Virginia, but in an unusually secretive process, it managed to keep the precise loca- tion under wraps. The company has settled on 2980 Fairview Park Dr., a 14-story
building that was owned by Veri- zon until it was sold to a subsid- iary of ING Clarion Partners in September 2007 for $105 million. Verizon occupies a small portion of the building but is expected to move out by September. The building is near the Belt-
way and its location provides convenient access to Dulles Inter- national Airport and the Penta- gon.
“First and foremost, the build-
ing’s available,” said Northrop spokesman Randy Belote. “Sec- ondly, it offers the accessibility to our customer set, the proximity that we required, and it obviously falls into the economics we were looking for.”
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Belote would not say what the company paid to acquire the of- fice building. Northrop initially planned to move 300 corporate jobs from California to the new office, but Belote said the figure will prob- ably grow by “a few hundred” be- cause the company also plans to relocate most of the workers in its Rosslyn office. Belote said Northrop has not made a final decision on whether it will close the Rosslyn location, space the company rents at 1000 Wilson Blvd. in a building that bears its name. The move will be conducted in phases, but the new office will be fully staffed by next summer, Be- lote said. Because the building needs little work, he expressed confidence that the company will stay on schedule. Northrop’s move further con-
centrates the defense industry’s presence in the region. Within the same Fairview complex, Nor- throp will have as neighbors
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11,300 10,300 9300 8300
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“It offers the accessibility to our customer set, the proximity that we required, and it obviously falls into the
economics we were looking for.”
— Randy Belote, Northrop spokesman
and interesting to other compa- nies that would look.” Gordon said the county will
JEFFREY MACMILLAN FOR THE WASHINGTON POST
Wes Bush is chief executive of Northrop Grumman, already a key employer in the Washington region. “The national capital region is
longtime local company General Dynamics as well as CSC, which relocated from California in 2008.
Other major defense contrac- tors in the area include Lockheed Martin in Bethesda, Science Ap- plications International Corp. in McLean and ManTech in Fairfax — as well as the U.S. offices for BAE Systems in Arlington.
rapidly becoming the center of the entire global defense indus- try,” said Loren Thompson, a de- fense industry consultant at the Lexington Institute. “The advan- tages of proximity are multiple. It’s not just the ease of going to meetings, but you bump into your customer at the supermar- ket or at the country club.”
THE MARKETS 10,216.27
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Cisco Systems 22.86 Coca-Cola DuPont
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Exxon Mobil 58.94 GE
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YTD –0.5 5.7
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Other Measures Index
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DJ Total Stock Market Index 11,213.32 Russell 2000
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F M A M J
Company IBM
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Travelers Wal-Mart Walt Disney
Close 128.67
20.57 60.21 39.19 29.00 69.94 36.09 24.83 62.09 14.93 51.12
United Tech 66.68 Verizon
26.49 50.12 33.77
Daily 1.6
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Australia (ASX 200) China (CSI 300) Hong Kong (Hang Seng) Japan (Nikkei)
4409.90 2676.22
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US $ 0.8
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Daily%Chg YTD%Chg –0.1 –1.2 –0.4 –2.2
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4.7
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Money market funds 6-Month CDs 1-Year CDs 5-Year CDs New car loan Home-equity loan
0.75 0.81 1.14 2.51 6.33 7.41
0.53% 0.25% 3.25%
Bank Prime Federal Funds LIBOR 3-Month
30-Year fixed mortgage 15-Year fixed mortgage 1-Year ARM
3.19% 4.13% 4.63%
US $ per EU € per
Japan ¥ per Britain £ per Brazil R$ per
Canada $ per Mexico $ per
0.7939 88.6200 111.6200
0.6655 0.8382 0.0075 1.7634 1.0362
2.2211 0.0199 1.3051 0.0117
12.8349 16.1663 0.1450
0.3 1.1
0.4 –0.4 Japan ¥
1.2596 0.0113 0.0090
Britain £
1.5028 0.5672 1.1931
Brazil R$ Canada $ Mexico $ 0.9651 0.0779 0.7662 0.0619
0.4502
133.1800 50.2380 85.5300 6.9050 0.3773
2.6507 1.5571 0.5874 19.2877
0.6422 0.0518 1.7024 0.1374 0.0807
7.2790 12.3863 Close
62,960.10 11,565.76 31,870.55
251.18
3567.66 6077.19 5167.02
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YTD%Chg –30%
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Commodities Futures
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Tuesday Morning SanDisk
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Close %Chg $46.79 32.2
$3.41 21.8 $1.76 13.5 $32.00 10.8 $4.18 10.0 $38.86 8.4 $4.65 7.9 $45.81
6.8
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MicrusEndovascular $23.19 4.5 New York Times Healthways Inc LoJack Corp Qualcomm Motorola
$35.10
Rewards Network Standard Register Polaris Industries
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Anadarko Petroleum $46.75 3.0
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4:30 p.m. New York time. Losers
Hanmi Financial Acxiom Corp
GreatAtla&PacTea AON Corp
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Methode Electronics $10.06 –5.1 Network Equipment Lindsay Corp CROCS
Interface Inc
2-year note Yield:
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Treasury Performance Over Past Three Months
$3.58 –5.0 $32.60 –5.0 $10.28 –4.9 $10.67 –4.7
Soybeans Sugar Wheat
$800
For Fairfax, the selection marks one of several recent cor- porate relocation wins. SAIC and CSC settled in the county, as did Volkswagen Group of America and Hilton Worldwide. “It gives us momentum,” said
Gerald L. Gordon, president and chief executive of the Fairfax County Economic Development Authority. “It makes us believable
match an investment of as much as $3 million from the Governor’s Development Opportunity Fund by providing in-kind transporta- tion infrastructure improve- ments. The state will provide as much as $10 million through the Virginia Economic Development Incentive Grant. “We’ve offered Northrop Grumman a couple of options, and they haven’t decided which one they have selected yet,” Gor- don said, adding that he expects the company to provide those de- tails in several months. Northrop has about 40,000 employees already in the region.
censerm@washpost.com oconnellj@washpost.com
Washington Post staff writer Derek Kravitz contributed to this report.
Data and graphics by
$1.3835 $17.90
$10.3175 $0.1710 $5.2125
day $1000
Close %Chg +0.6 –0.9 +0.6 +3.0 –0.4
Daily
month $1200
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