The Federal Housing Finance Agency (FHFA) has hired a private law firm as it continues to review subpoenaed loan documents from banks and Wall Street firms that sold Fannie Mae and Freddie Mac private-label MBS.

The GSE regulator is considering possible litigation to recoup losses that Fannie and Freddie incurred from their investments in Alt-A and subprime mortgage securitizations.

As reported by National Mortgage News several months ago, the GSEs have several due diligence vendors under contract to review the quality of loans they purchased from lenders.

FHFA recently hired Quinn Emanuel Urquhart & Sullivan of Los Angeles, to coordinate its investigation, according to The Wall Street Journal. (FHFA confirmed that a law firm was hired but declined to identify which one.) Quinn Emanuel specializes in business litigation.

In July, the GSE regulator issued 64 subpoenas to securities firms, conduits, and banks, asking for information about private label MBS they sold to Fannie and Freddie during the housing boom.

"As the requested information comes to FHFA, it will be analyzed. No decisions for future action have been made," said FHFA spokeswoman Stefanie Johnson.

The two GSEs have been in conservatorship since September 2008. FHFA estimates the losses to the taxpayers could total up to $258 billion by yearend 2013.

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