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Another FHFA MBS Settlement Reached

Proceeds recovered from losses on private-label mortgage-backed securities acquired by Fannie Mae and Freddie Mac had already reached nearly $8 billion, and the latest settlement adds more than $1 billion to the pile.

The regulator and conservator for the pair of secondary lenders, the Federal Housing Finance Agency, filed 18 lawsuits in 2011 against issuers and underwriters of MBS that Fannie and Freddie had purchased.

Last month, FHFA reported that seven settlements in 2013 brought total recoveries from the litigation to $7.88 billion.

Another FHFA settlement was disclosed on Tuesday by Morgan Stanley.

According to a filing with the Securities and Exchange Commission, the New York-based investment banking firm said that it reached a $1.25 billion agreement in principle with FHFA.

Morgan Stanley said that the settlement will require it increase its legal reserves by $150 million.

FHFA originally filed its lawsuit against Morgan Stanley in New York Supreme Court. It was subsequently moved to federal court in Manhattan.

Also named as defendants were former subprime lender and Morgan Stanley-subsidiary Saxon Capital Inc. along with other Saxon entities.

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