Correction: Wells Fargo-Mortgage Settlement story
In a story Nov. 6, 2013, about Wells Fargo to pay $335 million to settle a U.S. dispute, The Associated Press reported erroneously that the Federal Housing Finance Agency sued 18 financial institutions in September 2011 over sales of mortgage securities to Fannie Mae and Freddie Mac that later soured.
The FHFA sued UBS in July 2011 and 17 other banks in September.
A corrected version of the story is below:
Wells Fargo to pay $335M to settle FHFA dispute
Wells Fargo will pay $335 million settle claims that it mislead Fannie and Freddie
By The Associated Press
Wells Fargo & Co. will pay $335 million to resolve claims that it allegedly misled Fannie Mae and Freddie Mac about risky mortgage securities that it sold them prior to the housing collapse.
The San Francisco-based bank disclosed in a regulatory filing Wednesday that it settled the claims with Fannie Mae in its first quarter and Freddie Mac in its third quarter. According to the filing, the settlement with the organizations, which fall under the Federal Housing Finance Agency, totaled approximately $335 million.
Wells Fargo and FHFA declined to comment further. Wells Fargo shares added 15 cents to $42.48 in afternoon trading.
Fannie and Freddie don’t directly make loans to borrowers. They buy mortgages from lenders, package them as bonds, guarantee them against default and sell them to investors. That helps make loans available and gives Fannie and Freddie a huge role in the housing market.
The two were rescued in a taxpayer bailout in 2008 as they sank under the weight of mortgage losses.
The FHFA sued 18 financial institutions in 2011 over their sales of mortgage securities to Fannie and Freddie, which own or guarantee about half of all U.S. mortgages. These types of securities soured after the housing bubble burst in 2007, losing billions in value.
Wells Fargo’s settlement payment is a fraction of what some of its peers are on the hook for — JPMorgan Chase agreed in October to pay $5.1 billion to settle similar claims.