Fannie Mae (NASDAQOTH:FNMA) and Freddie Mac (NASDAQOTH:FMCC) grabbed the headlines this week. However, the news didn't come from Congress, but the courts.

Activist investor dives in as one unloads
After its latest SEC filing, we learned that well-known Fairholme Capital Management, run by Bruce Berkowitz, reduced its holdings of the common stock in Fannie Mae and Freddie Mac by 26% and 11%, respectively, during the first three months of the year. This came just three months after we learned it began amassing positions in the common stock in the two government-sponsored entities, or GSEs. 

Carl Icahn

Carl Icahn. Source: www.insidermonkey.com.

But we also learned who did most of the buying of from Fairholme.

The Wall Street Journal reported a court filing revealing that even better known activist investor Carl Icahn, a man worth an estimated $22.4 billion, bought 6.8 million shares of Fannie and 5.7 million shares of Freddie from Fairholme in March, for a total of $50 million. These new positions gave Icahn a 0.9% ownership in Freddie and a 0.6% stake in Fannie.

Interestingly, Fairholme unloaded its positions on March 11, the notorious day when shares of Fannie Mae and Freddie Mac plummeted by 31% and 27% following the news of the Senate Banking Committee's introduction of the Johnson-Crapo bill aimed at winding down Fannie and Freddie.

While the WSJ wrote that "Daniel Schmerin, Fairholme director of investment research, said in a statement that the sales were small and didn't represent a change in Fairholme's view of the firms' value," it's noteworthy the corresponding sale and purchase occurred on such a notorious day for the two GSEs.

Fnma By Future Atlas

Source: Flickr / Future Atlas.

One state aims to take them down
On Monday, we also learned that the state of Massachusetts filed a lawsuit against Fannie and Freddie which accused them of preventing "foreclosure buyback programs," part of state law passed in 2012 that was meant to allow poorer residents in the states to keep their homes. 

The law was passed in an effort to assist state citizens by giving non-profits the ability to buy the foreclosed property and then, in turn resell to the original owners, yet the suit suggested that Fannie and Freddie did not uphold the law, called "An Act to Prevent Unnecessary and Unreasonable Foreclosures," as they prohibited sales to non-profit organizations.

In the announcement of the lawsuit, Massachusetts Attorney General Martha Coakley said:

It makes no sense for our federal government to stand in the way of this work to help struggling families stay in their homes, and it is illegal for Fannie and Freddie to do this in Massachusetts. For too long, Fannie and Freddie have been roadblocks to progress in addressing this foreclosure crisis, and I urge them to immediately reverse their policy on this common-sense program.

What to make of it all
It's fitting the latest news surrounding Fannie and Freddie resulted from a court filing and news of a lawsuit. Almost exactly one year ago it was reported that Fairholme had joined hedge fund Perry Capital and filed its own lawsuit against the U.S. government, alleging that "as solvent, highly profitable companies, Fannie and Freddie should honor all outstanding obligations to their investors" and no longer return money to the government.

While we don't know what the ultimate outcome of Fannie and Freddie will be, it seems more and more likely that the courts are where their future will be resolved.

Patrick Morris and The Motley Fool have no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.