She also did not accept the argument that the securities fell in value because of a downturn in the housing market. She said the allegations in the lawsuit were enough to support the FHFA's demand for punitive damages.

If the recent rulings are any indication of how the case will shape up in the future, the individuals named in the lawsuit better lawyer up.

Of course, banks might see the writing on the wall and Wowsettle, eager to put the uncertainty surrounding legal claims to rest. Which means Main Street's thirst for blood will still go unquenched.

-- Written by Shanthi Bharatwaj in New York.
Disclosure: TheStreet's editorial policy prohibits staff editors and reporters from holding positions in any individual stocks.

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