The Real Deal New York

Morgan Stanley will pay $1.25B to settle Fannie, Freddie claims

February 05, 2014 09:14AM

Morgan Stanley has agreed to pay $1.25 billion to settle a U.S. regulator’s claims that it sold toxic mortgage-backed securities to Fannie Mae and Freddie Mac that compounded their losses during the financial crisis.

Morgan Stanley had disclosed in a November filing that the case revolved around the sale of about $11 billion worth of mortgage-backed securities, and said yesterday in a filing that it took a $150 million charge on its fourth-quarter earnings.

A spokesperson for the Federal Housing Finance Agency, which regulates both Fannie and Freddie, confirmed the settlement to Bloomberg News. So far, seven banks including Deutsche Bank and JPMorgan Chase have agreed to pay nearly $8 billion to settle mortgage-backed securities claims with the agency. Claims against Goldman Sachs and Bank of America are still in litigation. [Bloomberg News]  – Hiten Samtani