FONT-SIZE Plus   Neg

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
T-Mobile US Inc. on Monday lifted its forecast for fiscal 2016 adjusted EBITA, a key earnings metric, as well as customer additions after reporting a surge in third-quarter profit and and revenues with strong customer growth. Earnings per share came in above market estimates. In pre-market activity, shares were gaining around 4.8 percent to $49. Shares of Philips Electronics NV were gaining around 3 percent in the early morning trading in Amsterdam after the Dutch consumer electronics giant reported Monday a higher profit in its third quarter driven by margin strength with improved performance in its segments. Consolidated comparable sales growth was 2 percent, driven by 5 percent increase in HealthTech portfolio. AT&T announced a definitive agreement to purchase Time Warner in a stock-and-cash transaction valued at $107.50 per share. This purchase price implies a total equity value of $85.4 billion and a total transaction value of $108.7 billion, including Time Warner's net debt. AT&T expects the deal to close before year-end 2017.
comments powered by Disqus
Follow RTT