Wells Fargo will pay $780 million in cash to Freddie Mac to settle on liabilities on home loans it sold to Freddie before the 2009 market crash, the bank said on Monday. The total settlement – which was reached Friday – came to $869 million, but was then adjusted for credits related to previous loan repurchases.
Wells Fargo, the fourth-largest American bank by assets and the nation’s largest mortgage lender, said in the announcement that the cost of its agreement was covered by reserves. In August, the bank estimated a $2.2 billion loss over claims that it had breached representations and warranties in mortgage loan sales, according to the New York Times.
Wells Fargo declined to comment to the New York Times about the settlement, and Freddie did not respond to the newspaper’s requests for comment.
Last week, Citigroup agreed to pay Freddie $395 million to settle similar claims about 3.7 million mortgages that the bank sold between 2000 to 2012, according to the Times. [NYT] – Hiten Samtani