Another lawsuit filed by the Federal Housing Finance Agency over alleged misrepresentations of the quality of private-label mortgage-backed securities has been settled — bringing the total to around $7 billion.
The regulator originally filed 17 lawsuits in September 2011 against issuers and underwriters of MBS purchased by the Federal National Mortgage Association and the Federal Home Loan Mortgage Corp.
The FHFA said at the time that misrepresentations and other improper actions by the defendants were partly responsible for losses that Fannie Mae and Freddie Mac incurred on the MBS.
Since that time, the regulator has reached settlements with five firms, including Citigroup Inc., JPMorgan Chase & Co. and Wells Fargo & Co.
On Friday, Deutsche Bank, AG, disclosed that it has reached an agreement to settle the litigation with FHFA.
Deutsche noted that the deal includes an agreement with FHFA to resolve past and future repurchase claims on loans included in RMBS that were acquired by Fannie and Freddie on which FHFA has asserted breaches of representations and warranties.
The settlement will cost the German bank $1.925 billion, with McLean, Va.-based Freddie getting $1.628 billion and Washington, D.C.-based Fannie receiving $0.297 billion.
“The agreement resolves Deutsche Bank’s single largest mortgage-related litigation case,” Deutsche said. “It resolves allegations that between 2005 and 2007 the bank did not provide adequate disclosure about certain residential mortgage-backed securities sold to Fannie Mae and Freddie Mac.”
The Deutsche statement indicated that the company has exited the mortgage businesses that gave rise to the claims.
Most of the settlement cost is already reflected in Deutsche’s litigation reserves, and no additional reserves will be needed for the settlement.
A statement from FHFA said, “The settlement agreement does not release Deutsche Bank from any claims relating to LIBOR manipulation and does not include claims made against Deutsche Bank in two other PLS lawsuits presently the subject of ongoing litigation: FHFA v. SC Americas, Inc., et. al., and FHFA v. Countrywide Financial Corp., et. al. The other parties to those lawsuits were not part of the negotiations with Deutsche Bank.”
| Dec 20, 2013 | Deutsche | $1.630 billion |
| Nov 7, 2013 | Wells Fargo | $0.335 billion |
| Oct 25, 2013 | Chase | $4.000 billion |
| Jul 22, 2013 | UBS Americas Inc. | $0.885 billion |
| May 28, 2013 | Citi | unknown |
| Jan 23, 2013 | General Electric Co. | unknown |
