Wells Fargo & Company
) 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
fraudulent sale of home loans and mortgage backed securities
(MBS) to Freddie Mac and Fannie Mae. According to a regulatory
filing, Wells Fargo has to shell out a sum of $335 million for
Wells Fargo is not the only major U.S. bank to be censured in the
FHFA lawsuit. The FHFA sued 18 international institutions for
selling faulty mortgages and securities to Fannie Mae and Freddie
Mac in 2011. Wells Fargo managed to evade the lawsuit as its
lawyers were already in negotiation with the FHFA regarding a
Notably, the penalty for Wells Fargo is considerably lower than
that of its Wall Street peer,
JPMorgan Chase & Co.
), which agreed to pay $4.0 billion to FHFA. Earlier this year,
) also settled their cases with the FHFA.
In October, Wells Fargo also announced a settlement with Freddie
Mac worth about $869 million. The settlement included the
resolution of all outstanding and potential repurchase claims
relating to the misrepresentation of loans originated and sold by
Wells Fargo directly to Freddie Mac before 2009.
The settlements by Wells Fargo depict its efforts to resolve all
mortgage-related issues, and thereby reduce costs in the coming
months. Moreover, such agreements will likely help revive the
economy, and bode well for the company. Wells Fargo currently
carries a Zacks Rank #3 (Hold).
CITIGROUP INC (C): Free Stock Analysis Report
JPMORGAN CHASE (JPM): Free Stock Analysis
UBS AG (UBS): Free Stock Analysis Report
WELLS FARGO-NEW (WFC): Free Stock Analysis
To read this article on Zacks.com click here.