Freddie Mac, Ally Financial fail to disclose $325 million settlement

New York /
May.May 31, 2011 01:05 PM

A $325 million payment from Ally Financial to Freddie Mac has come to light in an exhibit deep within an amended offering document by Ally as part of a planned share sale to the public, according to the Wall Street Journal. Prior to the revelation, neither Ally, General Motors’ former financing arm which is now primarily government-owned, nor Freddie had disclosed the settlement amount, which had only been documented by the companies in their quarterly securities filings.

Like another settlement between the two firms for $462 million last December, this latest does not mark a major setback; the company had already reserved for the potential repurchase expense. However, the lack of detailed disclosure makes it difficult for investors to know how to interpret a deal.

Investors must question how the government is balancing the need to reduce taxpayer loss with avoiding actions that may destabilize banks, the Journal said. Understanding the economics and rationale behind settlements such as the Ally deal is vital.

The Federal Housing Finance Agency, Fannie Mae and Freddie’s regulator, is a year into an inquiry into private-label mortgage securities sold by banks to investors, including Fannie and Freddie. In January, some members of congress also questioned whether mortgage settlements with Bank of America and between Ally and Fannie were actually back-door bailouts. [WSJ]


Related Articles

arrow_forward_ios
Top October loans: Cash cows, big buys, foreclosure avoidance
Top October loans: Cash cows, big buys, foreclosure avoidance
Top October loans: Cash cows, big buys, foreclosure avoidance
Fannie, Freddie to buy mortgages up to nearly $1M
Fannie, Freddie to buy mortgages up to nearly $1M
Fannie, Freddie to buy mortgages up to nearly $1M
(Getty)
Freddie Mac study of 12 million appraisals shows racial disparity
Freddie Mac study of 12 million appraisals shows racial disparity
FHFA director Sandra Thompson (FHFA, iStock)
Treasury suspends investment property restrictions to boost housing supply
Treasury suspends investment property restrictions to boost housing supply
Clockwsie from top left: Aby Rosen with 980 Madison Avenue, 258-278 Eighth Avenue, 1 West Street and 511 Lexington Avenue (RFR, JJ Operating, Google Maps)
These were the largest Manhattan real estate loans in July
These were the largest Manhattan real estate loans in July
From left: JPMorganChase CEO Jamie Dimon, Goldman Sachs CEO David Solomon and Morgan Stanley CEO James Gorman (Getty)
Demand for private-label mortgages on the rise
Demand for private-label mortgages on the rise
Fannie Mae CEO Hugh Frater (Fannie Mae, iStock)
Fannie Mae to count rent payments toward mortgage approval process
Fannie Mae to count rent payments toward mortgage approval process
Shares of Rocket Cos and LoanDepot rose while shares Fannie Mae and Freddie Mac plunged after Supreme Court ruling (Unsplash)
For mortgage sector stocks, Fannie and Freddie ruling was positive
For mortgage sector stocks, Fannie and Freddie ruling was positive
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...