SunTrust Reaches Accord With Freddie Mac On Faulty Mortgages

Posted by Patrick Barnard on October 02, 2013 No Comments
Categories : Residential Mortgage

Following news that Wells Fargo and CitiMortgage had reached settlements with government-sponsored enterprise (GSE) Freddie Mac over ‘faulty’ mortgages that the banks sold to the firm, it was announced yesterday that SunTrust had agreed to pay a total of $65 million (less credits of $25 million for repurchases already made and for reconciling adjustments) to settle similar claims.

Under the agreement, Freddie Mac has released SunTrust from certain existing and future repurchase obligations for approximately 312,000 loans funded by the GSE between 2000 and 2008.

The settlements – totaling approximately $1.3 billion – release the three banks from certain existing and future loan repurchase obligations relating to specific populations of single-family loans.

‘With these settlements, Freddie Mac is recouping funds effectively due to the nation's taxpayers,’ says Donald H. Layton, CEO of Freddie Mac, in a statement. ‘We believe these settlements are equitable, and we are pleased to have resolved legacy repurchase issues with three of our valued customers.’

The agreements also compensate Freddie Mac for certain past losses and potential future losses relating to denials, rescissions and cancellations of mortgage insurance.

All of the agreements were approved by the FHFA, conservator of the GSEs.

Last Friday, it was announced that Wells Fargo had agreed to pay Freddie Mac a total of $869 million (less credits of $89 million for repurchases already made and for reconciling adjustments), thus releasing it from certain existing and future repurchase obligations for loans funded prior to Jan. 1, 2009, including approximately 6.7 million loans sold to Freddie Mac from 2000 through 2008.

Just two days prior, CitiMortgage announced that it had agreed to pay Freddie Mac a total of $395 million (less credits of $43 million for repurchases already made and for reconciling adjustments), thus shielding Citigroup from existing and future repurchase obligations for approximately 3.7 million loans funded between 2000 and 2012.

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