The Real Deal New York

Credit Suisse to pay $885M to Fannie, Freddie in mortgage suit

Litigation brought by New York, New Jersey over alleged misrepresented risk still pending

March 24, 2014 09:30AM

From left: Fannie Mae, Credit Suisse and Freddie Mac

From left: Fannie Mae, Credit Suisse and Freddie Mac

Credit Suisse Group, one of 18 lenders sued by the Federal Housing Finance Agency in 2011 to recover losses on $200 billion in mortgage-backed securities, will shell out $885 million in a settlement over mortgages sold to Fannie Mae and Freddie Mac.

The company’s largest ever mortgage-related litigation is tied to roughly $16.6 billion in residential mortgage-backed securities Credit Suisse sold to Fannie Mae and Freddie Mac from 2005 to 2007, the bank told Bloomberg. Credit Suisse will pay $651 to Freddie Mac and about $234 million to Fannie Mae, the FHFA told the news site.

“It’s definitely good for Credit Suisse to have this thing out of the way,” Guido Hoymann, a Frankfurt-based analyst with Bankhaus Metzler, told Bloomberg.

The settlement comes as another lawsuit brought by the state of New Jersey in 2013 — claiming the bank misrepresented risk to investors on over $10 million in RMBS — remains unresolved. At the time, the Swiss bank said the suit was “without merit.” That litigation closely resembles another suit brought by New York Attorney General Eric Schneiderman in 2012, claiming Credit Suisse mislead investors about a review of the mortgages underlying such securities. The bank has asked a judge to dismiss that case, which is also still pending. [Bloomberg News]Julie Strickland

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