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Fannie Mae Litigation Could Be Decided in Delaware Court……Soon

Fannie Mae / Federal National Mortgage Assctn Fnni Me (OTCBB:FNMA) Litigation Could Be Decided in Delaware Court……Soon

This goes to yesterday’s post on the Appellate Court’s Order

Chapman nails this. The Appellate Court in his (and mine) opinion is sending this question to the Delaware Court for an opinion as to the very legality of the Net Worth Sweep under Delaware law. Sure, Fannie Mae is a federally chartered institution, but they are incorporated under the laws of Delaware. Rather than spend the time and resources deciding where Lamberth may or may not have erred and the arguments on whether or not the NWS is legal under HERA or what HERA actually enables the government to do, the Appeals court may want to simply know if it is legal under Delaware law. If it isn’t, game over

Anyone want to take odds that the court places serious weight on its former Chief Justice’s already filed opinion?

Fannie Mae Peter Chapman opines:

Here’s my wild theory about a possible reason the U.S. Court of Appeals for the D.C. Circuit entered its single-sentence order yesterday suspending briefing in Perry v. Lew:

The Amicus Brief filed in Perry v. Lew that’s authored by Judge Myron Steele on behalf of the Center for Individual Freedom contends that the Net Worth Sweep in inconsistent with Sec. 151 of the Delaware General Corporation Law and is unenforceable on its face. The answer to whether the Net Worth Sweep is proper or improper under Delaware law may be a threshold question the U.S. Court of Appeals of the D.C. Circuit wants answered before it spends time, effort and energy examining the other issues raised by the shareholder-plaintiffs in their appeals from Judge Lamberth’s Sept. 30, 2014, decision dismissing the lawsuits filed in the U.S. District Court.

Certifying this narrow question of law to the Delaware Supreme Court would help the shareholders, the Government and the Federal Courts immeasurably. If the Net Worth Sweep is void — as Judge Steele contends it is — Fannie and Freddie shareholders will cheer. If the Delaware Supreme...