Barclays Bank, along with related companies and specifically named individuals, will pay $280 million to settle claims brought by the Federal Housing Finance Agency (FHFA) regarding faulty mortgages sold to Fannie Mae and Freddie Mac in the run-up to the financial crisis in 2005-2007.
The settlement resolves claims in the lawsuit FHFA v. Barclays Bank PLC, et al., as well as claims against Barclays in FHFA v. Ally Financial Inc., et al, alleging violations of federal and state securities laws. Both cases are in the U.S. District Court for the Southern District of New York.
As per the agreement, Barclays will pay $227 million to Freddie Mac and $53 million to Fannie Mae.
This is the 13th settlement the FHFA has announced in relation to the 18 lawsuits the agency filed in 2011 over faulty mortgage-backed securities. In March, the FHFA announced that Bank of America had agreed to pay $9.3 billion to settle claims that it sold faulty mortgages to Fannie Mae and Freddie Mac between 2005 and 2007. Most of those loans were originated by Countrywide Financial and Merrill Lynch – which were acquired by Bank of America in 2008.
As per the settlement, Bank of America will pay $5.83 billion to the FHFA and certain named individuals to settle the claims. In addition, it must repurchase, or buy back, some of the poorly underwritten mortgage loans that were sold to Fannie and Freddie, as well as cover certain legal fees related to the case.
Earlier in March, the FHFA announced that Credit Suisse Group had agreed to pay $885 million to settle a similar lawsuit. Under the terms of that agreement, Credit Suisse will pay approximately $234 million to Fannie Mae and approximately $651 million to Freddie Mac. In exchange, certain claims against Credit Suisse related to the securities involved will be released.
In addition, the FHFA announced last month that it had reached a settlement with SociÃ©tÃ© GÃ©nÃ©rale – another one of the banks sued – for $122 million. That lawsuit was to resolve the sale of faulty mortgages to Fannie Mae and Freddie Mac in 2006.
In settling the lawsuits, each of the banks admitted no wrongdoing, and no criminal charges were brought.
So far, the FHFA has recouped more than $15 billion in settlements related to the sale of faulty or fraudulently underwritten mortgages that were sold to Fannie and Freddie.