Wells Fargo in Settlement with FHFA - Analyst Blog

By
A A A

Wells Fargo & Company ( WFC ) announced a settlement with the Federal Housing Finance Agency (FHFA) - conservator of Government Sponsored Enterprises (GSEs) Freddie Mac and Fannie Mae. The settlement is related to the sale of home loans and mortgage backed securities (MBS). Wells Fargo had to shell out a sum of less than $1 billion for the settlement.

Wells Fargo was the only major U.S. bank that was not imputed in the FHFA lawsuit. The FHFA sued 18 international institutions for selling faulty mortgages and securities to Fannie Mae and Freddie Mac. Wells Fargo managed to evade the lawsuit as its lawyers were already in negotiation with the FHFA regarding a settlement.

Notably, the penalty for Wells Fargo is considerably lower than that of its Wall Street peer, JPMorgan Chase & Co. ( JPM ), which agreed to pay $4.0 billion to FHFA. Earlier this year, UBS AG ( UBS ) and Citigroup Inc. ( C ) also settled their cases with the FHFA.

In October, Wells Fargo announced a settlement with Freddie Mac worth about $869 million. The settlement included the resolution of all outstanding and potential repurchase claims relating to misrepresentation of loans originated and sold by Wells Fargo directly to Freddie Mac before 2009.

The lawsuit settlement by Wells Fargo reflects the bank's aim to resolve all mortgage-related issues, and thereby reduce costs over the upcoming period. Moreover, such agreements are expected to help revive the economy and hence bode well for the bank.

Wells Fargo currently carries a Zacks Rank #3 (Hold).



CITIGROUP INC (C): Free Stock Analysis Report

JPMORGAN CHASE (JPM): Free Stock Analysis Report

UBS AG (UBS): Free Stock Analysis Report

WELLS FARGO-NEW (WFC): Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Stocks

Referenced Stocks: C , JPM , UBS , WFC

Zacks.com

Zacks.com

More from Zacks.com:

Related Videos

Russell’s One Good Reason
Russell’s One Good Reason           
Tammy’s One Good Reason
Tammy’s One Good Reason             
Lisa’s One Good Reason
Lisa’s One Good Reason              

Stocks

Referenced

Most Active by Volume

87,324,760
  • $7.31 ▲ 22.04%
79,329,227
  • $17.16 ▲ 0.76%
74,153,988
  • $8.87 ▼ 5.84%
49,177,672
  • $34.01 ▲ 4.39%
44,197,901
  • $101.40 ▲ 1.38%
43,197,735
  • $11.70 ▲ 3.36%
42,712,021
  • $74.99 ▲ 1.19%
42,423,171
  • $108 ▲ 0.95%
As of 10/31/2014, 04:15 PM

Find a Credit Card

Select a credit card product by:
Select an offer:
Search
Data Provided by BankRate.com