All those mortgages that weren’t worth the cocktail napkins they were written on are continuing to sting big banks, with Wells Fargo announcing this morning that it had reached a $591 million deal with Fannie Mae to resolve the mortgage-backer’s claims that Wells sold it a pile of loans that the bank knew were toxic.
According to a statement from Well Fargo, the bank has already bought back some of these disputed loans, dropping the full amount it owes Fannie to $541 million.
In October, the bank reached a similar settlement with Freddie Mac, agreeing to pay out $780 million to the mortgage insurer.
Wells, like other lenders, had been accused of misleading Fannie and Freddie about the quality of the loans it bundled and re-sold as mortgage-backed securities during the housing boom. When those loans went south, the federal government was forced to step in and bail out both Fannie and Freddie.
While this settlement appears to resolve the issues between Fannie and Wells Fargo, the bank still faces allegations from the Dept. of Housing and Urban Development that the bank misled the Federal Housing Administration about the quality of FHA-insured loans.
via Consumerist http://consumerist.com/2013/12/30/wells-fargo-to-pay-fannie-mae-541-million-over-toxic-loans/
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