Wells Fargo & Co (NYSE:WFC) Pays Penalty Of $335 Million To Settle FHFA claims
Wells Fargo & Co (NYSE:WFC), a bank holding company, has agreed to pay $335 million as a settlement fee to resolve claims that it had misled the U.S, government agency Fannie Mae and Freddie Mac about the bank’s mortgage bonds.
In its regulatory filing, WFC said that in its first quarter the bank settled the claims with Fannie Mae and in its third quarter the claims were settled with Freddie Mac. The settlement with the government organizations totalled about $335 million.
Both Fannie Mae and Freddie Mac, the organizations which falls under the Federal Housing Finance Agency (FHFA), claimed that Wells Fargo & Co’s some mortgage bonds’ offering documents contained false information. However, the bank didn’t disclose the breakup of the settlement fee, as to how much was paid to Fannie Mae and Freddie Mac separately.
In September 2011, The Federal Housing Finance Agency sued 18 financial institutions over their sales of mortgage securities to Fannie Mae and Freddie Mac. Wells Fargo’s settlement fee was far too less compared to some of its peers settled for. So far four financial institutions have settled mortgage related claims, including UBS AG (US listing) (NYSE:UBS), which paid a penalty of $885 million; and JPMorgan Chase & Co. (NYSE:JPM) settlement of $5.1 billion.
In addition, in a separate report Wells Fargo & Co, under a 1989 law, is facing federal investigation related to the mortgage-backed securities sales, that the government is using to extend probes of banks’ roles in the credit crisis. If a Bloomberg report is to be believed then the authorities are investigating whether the bank violated the Financial Institution Reform and Recovery Act (FIRREA).
Citigroup Inc (NYSE:C), Bank of America Corp (NYSE:BAC), JPMorgan Chase & Co. (NYSE:JPM), Credit Suisse Group AG (ADR) (NYSE:CS), and also are among firms facing FIRREA investigations. Wells Fargo & Company is one of the leading mortgage lenders in the U.S.