(UBSN.VX, UBS) must defend a lawsuit brought by th

(UBSN.VX, UBS) must defend a lawsuit brought by the federal regulator for Fannie Mae (FNMA) and Freddie Mac (FMCC) over the sale of $6.4 billion in securities backed by residential mortgages , including subprime home loans, a federal appeals court has ruled . The ruling, by the U.S. Second Circuit Court of Appeals, is the latest setback for the Swiss bank and other large banks defending a series of lawsuits by the Federal Housing Financial Agency. The regulator claims the banks misled Fannie Mae and Freddie Mac about the quality of the underlying mortgages related to nearly $200 billion in mortgage investments. In its ruling Friday, the appeals court rejected arguments by UBS that the claims were barred because they were filed too late and the agency lacked standing to pursue the case because its acting directors weren't properly appointed. The UBS lawsuit relates to about $6.4 billion in residential mortgage- backed securities sold to the mortgage companies between September 2005 and August 2007. The decision comes as the banks, including UBS, are separately seeking to reverse a series of ruling by U.S. District Judge Denise Cote, who is presiding over the cases, that have limited their ability to collect additional evidence to bolster their defense in the lawsuits. The banks have separately asked the appeals court to reverse her prior decisions. A UBS spokeswoman didn't immediately return a phone call seeking comment Friday.





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