A Wells Fargo sign is seen outside a banking branch in New York July 13, 2012.
Credit: Reuters/Shannon Stapleton
(Reuters) – Wells Fargo & Co said on Monday it will pay $ 780 million in cash to Freddie Mac to resolve substantially all repurchase liabilities on home loans sold to the government-controlled mortgage company prior to 2009.
The largest U.S. mortgage lender said the settlement was reached on September 27 and totaled $ 869 million before adjusting for credits related to prior loan repurchases.
Wells Fargo announced the settlement five days after Citigroup Inc agreed to pay Freddie Mac $ 395 million to settle similar claims over roughly 3.7 million mortgages sold from 2000 to 2012.
Citigroup is the third-largest U.S. bank by assets, while Wells Fargo ranks fourth.
Wells Fargo said the cost of its agreement is covered by existing reserves.
On August 7, the San Francisco-based lender estimated a probable $ 2.2 billion loss over claims it breached representations and warranties in the sale of mortgage loans.
It is unclear how much of the latest settlement related to Wachovia Corp, which Wells Fargo bought at the end of 2008.
Freddie Mac and larger rival Fannie Mae, which both received federal bailouts in 2008, have pushed banks to buy back mortgages that soured during the nation’s housing downturn.
Banks can be forced to buy back loans if the representations and warranties over how well the loans were underwritten, and whether borrowers could afford them, prove false.
Citigroup agreed in July to pay $ 968 million to settle repurchase claims by Fannie Mae, while Bank of America Corp agreed in January to pay $ 3.6 billion.
Freddie Mac did not immediately respond to a request for comment. Wells Fargo declined to comment, citing a “quiet period” ahead of its October 11 release of third-quarter results.
(Reporting by Jonathan Stempel in New York. Editing by Andre Grenon)
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Comments (2)
So let see Sen Warren go to work for the rest of this money. I expect Wells Fargo to roll out in front of the Justice Dept any day now, with a $ 11-$ 14 billion offer also, as banks follow trends as they did with this corrupt lending!
Now we have to settle the Ginnie Mae Ponzi activity. Don't Washington Mutual Bank government insured loan ring a bell for you Wells Fargo, as you don't own these government loans but foreclosed on them as if you were the owner? The proof is in the still blank Notes!