logo
Plus   Neg
Share
Email
Comment

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

Financial services company Wells Fargo & Co. (WFC) 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.

by RTT Staff Writer

For comments and feedback: editorial@rttnews.com

Business News

Editors Pick
Verizon Communications Inc. (VZ) reported an adjusted fourth-quarter earnings per share of $0.86, flat with a year ago. On average, 24 analysts polled by Thomson Reuters expected the company to report profit per share of $0.88 for the quarter. Analysts' estimates typically exclude special items. Fourth-quarter... Consumer goods giant Procter & Gamble Co. on Tuesday reported a 68 percent fall in profit for the second quarter from last year as an increase in sales was more than offset by a tax charge related to the U.S. tax reform in the latest quarter and a divestiture gain in the year-ago period. However, both revenue and core earnings per share for the quarter beat analysts' estimates. Shares of easyJet Plc were gaining around 6 percent in London trading after the low-cost airline reported Tuesday higher revenues, traffic and capacity in its first quarter. Looking ahead, revenue per seat at constant currency is expected to increase by mid to high single digits in the first half. Johan Lundgren, Chief Executive, said, "easyJet delivered a strong start to the financial year...
comments powered by Disqus
Follow RTT