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FHFA Objection to Debtor's Motion to Examine - Ocala Funding, LLC

FHFA Objection to Debtor's Motion to Examine - Ocala Funding, LLC

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Published by stacyvan
Ocala Funding, LLC was the bankruptcy remote funding arm of Taylor, Bean & Whitaker Mortgage Corp. before they were shut down for fraud. The FHFA asserts that the Plan Trustee Neil Luria has already spent an enormous amount of resources and money on the reconciliation and now seeks to expend more on the same research.
Ocala Funding, LLC was the bankruptcy remote funding arm of Taylor, Bean & Whitaker Mortgage Corp. before they were shut down for fraud. The FHFA asserts that the Plan Trustee Neil Luria has already spent an enormous amount of resources and money on the reconciliation and now seeks to expend more on the same research.

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Published by: stacyvan on Oct 23, 2012
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12/04/2012

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UNITED STATES BANKRUPTCY COURTMIDDLE DISTRICT OF FLORIDAJACKSONVILLE DIVISIONIn re:OCALA FUNDING, LLC,Debtor. ____________________________________________/Case No.: 3:12-BK-04524-JAFChapter 11FEDERAL HOUSING FINANCE AGENCY OBJECTION TODEBTOR’S MOTION FOR ENTRY OF AN ORDER AUTHORIZINGEXAMINATION PURSUANT TO RULE 2004
The Federal Housing Finance Agency (“FHFA”), is the conservator and primary federalregulator for the Federal Home Loan Mortgage Corporation (“Freddie Mac”). FHFArespectfully submits this objection to the Motion For Entry of an Order Authorizing andDirecting Examination of the Federal Housing Finance Agency and Federal Home LoanMortgage Corporation Pursuant to Rule 2004 (the “2004 Motion”) of the Federal Rules of Bankruptcy Procedure filed by Ocala Funding, LLC (“Debtor”).
RESERVATION OF RIGHTS
1.
 
FHFA appears for the sole, limited purpose of objecting to the 2004 Motion onthe grounds set forth herein. FHFA does not submit to or consent to the jurisdiction of this Courtover it or over any matter or waive any rights related thereto including, without limitation, theright to seek withdrawal of the reference over any matter or any right to seek relief from anArticle III judge.2.
 
FHFA expressly reserves all rights under Housing and Economic Recovery Act of 2008 (“HERA”), Pub. L. No. 110-289, 122 Stat. 2654 and applicable regulations, includingrights under section 4617(f) of HERA, 12 U.S.C. § 4617(f).
Case 3:12-bk-04524-JAF Doc 176 Filed 10/12/12 Page 1 of 11
 
 
2
 
DM1\3560294.4
 
3.
 
FHFA expressly reserves any further substantive and/or procedural objections itmay have, including but not limited to privilege, lack of relevance, technical deficiencies,additional jurisdictional grounds, or otherwise.
INTRODUCTION
4.
 
The Debtor, via the 2004 Motion, seeks to compel FHFA to produce internalagency documents that relate to “allegations of fraud,” investigations, and internalcommunication. The purpose of the procedurally defective and overreaching requested production is to commence litigation against Freddie Mac, an entity under federalconservatorship at all relevant times, in an effort to avoid certain transactions and transfers toFreddie Mac in late 2008 and 2009.5.
 
FHFA joins, and fully incorporates by reference, as if fully restated herein, thefacts, arguments and authority cited in
 Federal Home Loan Mortgage Corporation's Objection to Debtor’s Motion For Entry of an Order Authorizing and Directing Examination of the Federal  Housing Finance Agency and Federal Home Loan Mortgage Corporation Pursuant to Rule 2004
 
of the Federal Rules of Bankruptcy Procedure
and herein asserts additional grounds for thedenial of the 2004 Motion.6.
 
The sweeping request in the 2004 Motion is improper for failing to follow thestatutory requirements seeking disclosures from a federal agency. The rules and regulations thatfederal agencies must follow with respect to disclosing materials when the agency is not a named party often are referred to as “Touhy Regulations” (defined below). These regulations prohibitFHFA from producing requested documents relating to allegations made against Freddie Macand related investigation and resultant actions unless and until the process set forth in theregulations is followed by a requester.
Case 3:12-bk-04524-JAF Doc 176 Filed 10/12/12 Page 2 of 11
 
 
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DM1\3560294.4
 
7.
 
Specifically, FHFA cannot produce agency documents and other materials unless production has been permitted by the Director of FHFA. These regulations require that anyrequesting party, including the Debtor, abide by the procedures set forth for requesting any suchinformation, which the Debtor has not done. The Debtor cannot by-pass this process for requesting documents from a federal agency.8.
 
The relief sought in this 2004 Motion runs in direct conflict with FHFA’sdisclosure regulations and the policies in place to protect the limited resources of the governmentagency and tax-payers in seeking this type of disclosure.
 
RELEVANT BACKGROUND
9.
 
In 2008, Congress, through HERA, merged the Office of Federal HousingEnterprise Oversight (“OFHEO”) and the Federal Housing Finance Board to form the newFHFA, a new, independent federal regulatory agency.
See
HERA, 12 U.S.C. § 4511,
et seq
.;
 Inre Fed. Home Loan Mortgage Corp. Derivative Litig.
, 643 F. Supp. 2d 790 (E.D. Va. 2009). Inabolishing the OFHEO, HERA left intact the regulations enacted by the OFHEO, which continueto be enforceable by FHFA until they are replaced or modified.
See
HERA §§ 1301(f) and1302(a)-(b).10.
 
FHFA is the federal financial-institution regulatory agency responsible for overseeing the safety, soundness, and prudential operation of Freddie Mac. It is charged withensuring that Freddie Mac operates in a safe and sound manner and otherwise complies withHERA. 12 U.S.C. § 4513(a). In connection with section 4513, which sets out these duties andauthorities of FHFA, Regulation 1703,
et seq
., of the Code of Federal Regulations, prescribes the procedures to be followed with respect to release of information in legal proceedings, such asthis matter, to which FHFA is not a party.
Case 3:12-bk-04524-JAF Doc 176 Filed 10/12/12 Page 3 of 11

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