The Federal Housing Finance Agency (FHFA), acting as conservator of Fannie Mae and Freddie Mac, is launching a "financial inquiry" into private-label mortgage securities that might be linked to losses suffered at the government-sponsored enterprises (GSEs). The FHFA issued 64 subpoenas to various financial entities, seeking documentation related to private-label mortgage-backed securities (MBS) in which the two GSEs invested. The private-label firms involved are not named in the Specifically, the subpoenas seek loan file contents including documents used in the underwriting process -- such as loan applications and appraisals. These documents should allow FHFA to determine whether private MBS issuers are liable to the GSEs for losses they suffered on private-label MBS. The FHFA expects, in the event it determines the investigated entities are liable, to recoup funds that would be used to offset payments the Treasury Department made to the GSEs. The GSEs -- both before and during the conservatorship that took effect Sept 6, 2008 -- looked to enforce their rights as investors in private-label MBS in an effort to recoup losses on their own portfolios. Specifically, the GSEs have attempted to access documents necessary determine whether misrepresentations warrant the repurchase of loans by the MBS counterparties. The subpoenas arrive as FHFA's effort to resolve the months-long attempts by the GSEs to access these documents. "FHFA is taking this action consistent with our responsibilities as conservator of each [GSE]," said FHFA acting director Edward DeMarco, in a statement. "By obtaining these documents we can assess whether contractual violations or other breaches have taken place leading to losses for the Enterprises and thus taxpayers. If so, we will then make decisions regarding appropriate actions." DeMarco recently told ranking committee members in both the US Senate and House of Representatives that losses on private label mortgage-backed securities at Fannie and Freddie from 2005, 2006 and 2007 are directly responsible for the FHFA taking an oversight role in 2008. In 2009, the GSEs' losses totaled $93.6bn, and draws under the Treasury's preferred stock agreements associated with those losses totaled $66.1bn. Write to Diana Golobay.