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Freddie Mac to Seek Punitive Damages in Deloitte Lawsuit, Report Says

Freddie Mac Deloitte & Touche Taylor Bean WhitakerGovernment-sponsored mortgage giant Freddie Mac has decided to seek punitive damages in its $1.3 billion lawsuit filed against accounting firm Deloitte & Touche over some mortgage loans the GSE purchased from now-defunct mortgage servicer Taylor Bean & Whitaker, according to media reports.

Freddie Mac's lawyers accused Deloitte of “gross negligence” with regards to the purchased mortgage loans in an amended complaint that was unsealed Monday, according to the reports.

When reached by email, a spokesman from Freddie Mac declined to comment on the lawsuit and would not specify how much more than the original suit amount of $1.3 billion that the GSE would seek from Deloitte in punitive damages.

Freddie Mac sued Deloitte for $1.3 billion in a Florida court in September 2014 with regards to fraudulent mortgage loans the GSE purchased from Taylor Bean & Whitaker, according to reports. Freddie Mac says it would not have purchased those mortgage loans from Taylor Bean if Deloitte, which audited Freddie Mac from 2002 to 2009, had paid attention to red flags which indicated fraud.

Freddie Mac claims that Deloitte's negligence cost the GSE $1.3 billion. Freddie Mac was taken over by the government in September 2008 at the height of the financial crisis, and along with its fellow GSE, Fannie Mae, needed a $188 billion bailout from the government to stay afloat.

Taylor Bean, which was once the largest non-bank mortgage servicer in the nation, filed for bankruptcy in 2009. In 2011, Taylor Bean's chairman, Lee Farkas, was sentenced to 30 years in prison for fraud.

About Author: Brian Honea

Brian Honea's writing and editing career spans nearly two decades across many forms of media. He served as sports editor for two suburban newspaper chains in the DFW area and has freelanced for such publications as the Yahoo! Contributor Network, Dallas Home Improvement magazine, and the Dallas Morning News. He has written four non-fiction sports books, the latest of which, The Life of Coach Chuck Curtis, was published by the TCU Press in December 2014. A lifelong Texan, Brian received his master's degree from Amberton University in Garland.
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