U.S. Bancorp Pays $53M To Settle Mortgage Claims
Minneapolis-based U.S. Bancorp said this week that it will pay the Federal Home Loan Mortgage Corporation (Freddie Mac) $53 million as part of a settlement agreement.
Freddie Mac buys mortgages from banks in order to sell them to investors as “mortgage-backed securities.” In some cases, Freddie Mac can require banks to buy back the mortgages if they don’t meet the firm’s quality standards.
U.S. Bancorp will pay the multimillion-dollar settlement to resolve claims related to mortgage loans it made to the government-controlled firm between 2000 and 2008, relieving itself of its obligations to buy back its mortgages. U.S. Bancorp said it would pay with cash it has in reserve.
In early October, Freddie Mac announced that it made three similar settlements with other banks, including San Francisco-based Wells Fargo Bank, which has a major presence in Minnesota.
Wells Fargo entered its settlement agreement with Freddie Mac on September 27. The bank agreed to pay Freddie Mac $869 million to relieve itself of its obligations for loans it made to Freddie Mac prior to January 1, 2009, which included about $6.7 million in loans sold between 2000 and 2008.
In that same announcement, Freddie Mac said it also settled with New York City-based Citigroup for $395 million and Atlanta, Georgia-based SunTrust Banks for $65 million for the same repurchase obligations claims.
“With these settlements, Freddie Mac is recouping funds effectively due to the nation’s taxpayers,” Freddie Mac CEO Donald Layton said when the firm announced the three earlier settlements. “We believe these settlements are equitable, and we are pleased to have resolved legacy repurchase issues with three of our valued customers.”
More recently, Freddie Mac settled mortgage repurchase claims last week with Pittsburgh-based PNC Financial Services Group by way of an $89 million agreement. Charlotte, North Carolina-based Bank of America preceded PNC with a much more expensive settlement of $404 million with Freddie Mac on December 2.
According to White Plains, New York-based NERA Economic Consulting, settlements related to mortgage repurchase claims by Freddie Mac, and its larger sister firm Fannie Mae, between 2011 and October exceeded $18 billion.