Breaking News
FONT-SIZE Plus   Neg
Share SHARE

Wells Fargo Reaches $869 Mln Deal To Settle Freddie Mac Mortgage Loan Claims

RELATED NEWS
Trade WFC now with 

Financial services company Wells Fargo & Co. (WFC: Quote) announced Monday that it has reached a $869 million settlement with Federal Home Loan Mortgage Corp. or Freddie Mac (FMCC) related to mortgage claims. The settlement was reached on Friday.

Wells Fargo will finally settle the claims with a one-time cash payment of about $780 million after adjusting for credits related to certain prior repurchases.

At June 30, 2013, Wells Fargo had fully accrued for the cost of the agreement.

The deal resolves substantially all repurchase liabilities related to mortgage loans sold by Wells Fargo to Freddie Mac prior to January 1, 2009.

The claims stem from the sale of toxic home loans to U.S. government-backed Freddie Mac by making fraudulent misrepresentations and omissions to promote the sale.

The Federal Housing Finance Agency or FHFA, took over Freddie Mac and Fannie Mae (FINA), two government-backed finance companies in 2008, after they were bailed out by the government. FHFA is now the regulator and conservator of Fannie Mae and Freddie Mac and the regulator of the 12 Federal Home Loan Banks.

Wells Fargo, the fourth-largest bank in the U.S. by assets, is the largest originator of home mortgages in the U.S. and under a federal program, has the mandate to originate, underwrite, and certify mortgages for FHA insurance.

The settlement comes within a week of another financial services giant Citigroup, Inc. (C) agreeing to pay $395 million to mortgage guarantor Freddie Mac to settle potential future repurchase claims for faulty mortgages.

The Citigroup settlement covers breaches of representations and warranties on 3.7 million loans sold to Freddie Mac between 2000 and 2012. Citi said the payment will be made out of existing mortgage repurchase reserves. In July, Citi reached a similar settlement with Fannie Mae for $968 million.

WFC closed Monday's regular trading session at $41.32, down $0.27 or 0.65% on a volume of 20.36 million shares.

Register
To receive FREE breaking news email alerts for Wells Fargo & Co and others in your portfolio

by RTT Staff Writer

For comments and feedback: editorial@rttnews.com

Business News

Editors Pick
A ban on athletes using stamina-boosting gases - xenon and argon - came into effect on Monday. The World Anti-Doping Agency (WADA) said Hypoxia-Inducible Factor (HIF) activators Xenon and Argon have been added to the 2014 List of Prohibited Substances and Methods List following the required three-month notice period and UNESCO's communication to all States Parties. A recommendation to revise the British manufacturing growth eased further in August to its lowest level in 14 months as output and demand increased at slower rates, survey results from Markit Economics showed Monday. The Markit/CIPS Purchasing Managers' Index dropped to 52.5 from a revised 54.8 in July. Economists had expected the score to fall to 55.1 from July's original figure of 55.4. Consumers spent less in July than in the previous month, a surprise retreat that complicates the prevailing belief that the U.S. economic situation is improving. Along with the unexpected drop in spending, government figures released on Friday showed that incomes rose at a slower pace in July than in the previous month. Meanwhile, data on prices indicated that inflation pressures remain tame.
comments powered by Disqus
FREE Newsletters, Analysis & Alerts

 

Stay informed with our FREE daily Newsletters and real-time breaking News Alerts. Sign up to receive the latest information on business news, health, technology, biotech, market analysis, currency trading and more.