We have written a lot about the U.S. mortgage finance giants Fannie Mae and Freddie Mac. These GSEs frequently find themselves in the news (and on our blog), typically for their involvement in obtaining settlements from banks and other aggregators in what we view to be an ongoing effort to revise the history of the meltdown of the mortgage markets.

However, there are occasions where Freddie and Fannie have found themselves on the other side of the lawsuit.  For example, in June, Perry Capital LLC and Fairholme Funds Inc. filed a suit against these GSEs, maintaining that there was unfair treatment of the Fannie Mae and Freddie Mac’s shareholders following their 2008 bailout. Specifically, the investors alleged that the GSEs seized almost all of the profits generated after the bailout and that, for a period of time, the government had been only entitled to receive a 10% dividend on a class of Fannie and Freddie’s preferred shares. On September 30, these suits were dismissed.

Nevertheless, Fannie and Freddie apparently were not unscathed. Their share prices plunged dramatically; Fannie’s prices fell 36.8% and Freddie’s prices fell 37.5%. Each of these declines occurred in a single day. Moreover, it appears that the litigation will continue. Perry Capital and Fairholme Funds announced last month that they would contest the case dismissed in September.

In another lawsuit settled on October 24, shareholders accused Fannie Mae of issuing false and misleading statements about its accounting, internal controls and other matters. Fannie settled this case for $170 million.

Neither have the GSEs escaped government scrutiny at this time. They have been a part of the federal regulators’ efforts to revive the U.S. housing market. Specifically, they will be expanding credit and guaranteeing loans with down payments that could be as low as 3%. Over the past several months, share prices of Fannie and Freddie have lost about 44% and 39% of their value, respectively. Even though in the last month their share prices have regained about 20% and 18.8% of their value, respectively, clearly, it’s been a busy and an expensive time for them.