Fannie Mae, Freddie Mac got $7.9 billion in bank settlements in 2013
WASHINGTON -- Fannie Mae and Freddie Mac collected $7.9 billion from large financial institutions to settle suits over bad mortgage-backed securities purchased by the seized housing finance giants during the subprime housing boom, their federal regulator said.
The deals involved payments from seven financial institutions, including JPMorgan Chase & Co., Citigroup Inc. and Deutsche Bank, according to the Federal Housing Finance Agency, which oversees Fannie and Freddie.
In one case, Wells Fargo & Co. paid $335 million to settle allegations to avoid a lawsuit from the regulator.
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The settlements had been disclosed but the amounts paid in some cases were not.
The largest settlement was $4 billion with JPMorgan Chase.
The other settlements were $1.9 billion with Deutsche Bank, $885 million with UBS Americas Inc., $475 million with Ally Financial Inc., $250 million with Citigroup and $6.25 million with General Electric Co.
The agency sued 18 financial institutions in 2011, alleging violations of securities law and in some cases fraud in the sale of mortgage-backed securities to Fannie and Freddie from 2005 to 2007.
Bad loans purchased by the firms pushed them to the brink of failure in 2008.
The federal government seized Fannie and Freddie and gave them a combined $187.5 billion to stay afloat so they could continue supporting the mortgage market through the Great Recession and recovery.
The finances of the firms have turned around with the housing market recovery and they have paid the government a total of $185.3 billion in dividends so far under terms of the bailout.
The settlements last year improved the bottom line of the two companies, which have returned to profitability.
The FHFA said it still is pursuing lawsuits against 11 financial institutions, including Bank of America Corp. and Goldman Sachs & Co.
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