A U.S. District Court judge on Monday said Nomura Holdings Inc. wasn't truthful in describing mortgage-backed securities sold to Fannie Mae and Freddie Mac, giving a victory to the companies' conservator, the Federal Housing Finance Agency.

Judge Denise Cote asked the FHFA to propose updated damages to be paid by Nomura and co-defendant RBS Securities Inc., which underwrote some of the investments. At the outset of the case, the FHFA asked for about $1.1 billion.

The order brought to conclusion a rare trial addressing alleged mortgage-related infractions committed during the housing boom. Over the past few years, more than a dozen firms chose to settle similar allegations brought by the FHFA rather than face a court battle. The settlements have brought Fannie and Freddie $18 billion in penalties.

In her decision, Judge Cote wrote that Nomura, in offering documents for mortgage-backed securities sold to Fannie and Freddie, didn't accurately describe the loans' quality.

"The magnitude of falsity, conservatively measured, is enormous," she wrote.

During the boom, Fannie and Freddie invested billions of dollars in mortgage-backed securities issued by such companies as Nomura. Those investments bolstered profits but, in the bust, contributed to steep losses that ultimately resulted in the companies' 2008 government takeover.

Nomura and RBS were two of 18 financial institutions, including Bank of America Corp. and Goldman Sachs Group Inc., targeted in 2011 by the FHFA, which alleged that the companies lied about the quality of the loans underlying the securities. During the nonjury trial, lawyers for the FHFA said that Nomura and RBS inflated values of homes behind some mortgages and sometimes said a home was owner-occupied when it wasn't.

Nomura and RBS became the first defendants to take their case all the way to trial. A separate case against the Royal Bank of Scotland Group PLC in Connecticut is ongoing.

A Nomura spokesman said the bank would appeal.

"Nomura is confident that it was consistently candid, transparent and professional in all of its dealings with Fannie Mae and Freddie Mac and looks forward to bringing its case to the U.S. Court of Appeals," said the spokesman.

Lawyers for Nomura and RBS had argued that Fannie's and Freddie's losses on the securities should have been attributed to the financial crisis rather than to misstatements in the offering documents. They also said that Fannie and Freddie knew the potential problems with the investments they were buying.

FHFA General Counsel Alfred M. Pollard said, "FHFA is pleased with the court's decision and we are reviewing the various elements of this important ruling. It is clear the court found that the facts presented by FHFA were convincing. FHFA looks forward to submitting proposed damages calculated under the formulae applied in the court's opinion."

A lawyer for RBS didn't respond to a request for comment.

Write to Joe Light at joe.light@wsj.com

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