FHFA settlements for 2013 reached $7.9 billion

Jan. 2, 2014 at 4:05 PM
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WASHINGTON, Jan. 2 (UPI) -- The U.S. Federal Housing Finance Agency said Thursday it had collected $7.9 billion in settlements from financial firms in 2013.

The regulator that oversees the Federal Home Loan Mortgage Corp., known as Freddie Mac, and the Federal National Mortgage Association, known as Fannie Mae, settled seven lawsuits in the year out of 18 filed in 2011 that charged various lenders with misrepresenting the soundness of mortgages it purchased.

Freddie and Fannie are known as government-sponsored banks, which buy huge numbers of mortgages from lenders. That gives the lenders quicker profits and puts liquidity back into the financial sector. It also allows Freddie and Fannie to influence the mortgage markets, given the point that banks tend to write mortgages by standards Freddie and Fannie find acceptable.

But Freddie and Fannie can be misled. The lawsuits filed in 2011 sought a total of $200 billion damages from the various firms for mortgages purchased before the market soured in 2008.

The Wall Street Journal said Thursday that the FHFA has reached settlements in six of the 18 lawsuits and settled claims against Wells Fargo for $335 million in a deal reached without a lawsuit filed.

The settlements include a $1.93 billion deal with Deutsche Bank, a $4 billion deal with JPMorgan Chase and an $885 million deal with UBS.

It has also collected $475 million from Ally Financial Inc., $250 million from Citigroup Inc. and $6 million from General Electric Corp.

Bank of America, which purchased Merrill Lynch & Co. and Countrywide Financial Corporation in 2008, has the largest potential settlement looming.

BofA was sued over $57.5 billion in soured securities. The regulator is seeking at least $6 billion, sources close to the deal making told the Journal.

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