Banks seek U.S. appeals court intervention in FHFA lawsuits

NEW YORK (Reuters) – Fifteen major banks sued by the Federal Housing Finance Agency over risky housing debt urged a U.S. appeals court on Wednesday to intervene, citing “gravely prejudicial” rulings by the trial judge coordinating the litigation.

In a joint petition filed with the 2nd U.S. Circuit Court of Appeals in New York, the banks said U.S. District Judge Denise Cote, had “systematically deprived” them of evidence to defend themselves, and issued rulings aimed at coercing settlements.

The banks, which include UBS AG , JPMorgan Chase & Co and Bank of America Corp , want to reverse several of Cote’s rulings, and get more access to information about what Fannie Mae and Freddie Mac knew about mortgage debt they bought prior to the 2008 financial crisis.

Fannie Mae and Freddie Mac, the nation’s two biggest mortgage finance companies, are regulated by the FHFA.

The unusual filing Wednesday was a sign of how serious the litigation had become. Analysts have said the banks face tens of billions of dollars in possible damages.

The lawsuits, filed in 2011, accuse the banks of violating securities laws by misleading the Fannie and Freddie about the quality of home loans packaged into $200 billion in securities.

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