(Adds further details on settlement, background on litigation)
By Nate Raymond
NEW YORK, April 29 First Horizon National Corp
will pay $110 million to resolve claims it misled Fannie
Mae and Freddie Mac into buying
mortgage-backed securities that later went sour, a U.S.
regulator said on Tuesday.
The settlement resolves a lawsuit filed in New York federal
court by the Federal Housing Finance Agency, the conservator
since 2008 for the government-controlled mortgage companies.
The deal marked the 12th settlement the FHFA has reached in
litigation the agency began in 2011 in a number of lawsuits over
about $200 billion in mortgage-backed securities, an investment
product at the center of the 2008 financial crisis.
As part of the deal, First Horizon will pay $61.6 million to
Fannie Mae and $48.4 million to Freddie Mac, the FHFA said.
First Horizon Chief Executive Bryan Jordan said in a
statement that the settlement was "another big step forward" in
the Memphis, Tennessee-based bank's efforts to unwind from its
former mortgage businesses.
First Horizon said it does not expect the accord to
materially impact earnings for the second quarter of 2014. The
bank said it had already established a reserve for the case and
had insurance available to cover part of the deal.
The FHFA's lawsuit accused First Horizon of misleading
Fannie Mae and Freddie Mac into buying $883 million in faulty
mortgage-backed securities from September 2005 to April 2007.
To date, the FHFA has recovered more than $16 billion in
direct connection with the lawsuits over similar securities,
according to the agency.
The deal with First Horizon followed a similar $280 million
settlement between the FHFA and Barclays Plc announced
Other banks to reach settlements include Bank of America
Corp, JPMorgan Chase & Co, Deutsche Bank AG
and Morgan Stanley.
Only four defendants remain, including Goldman Sachs Group
Inc, Nomura Holdings Inc, Royal Bank of Scotland
Group, and HSBC Holdings Plc.
The case is Federal Housing Finance Agency v. First Horizon
National Corporation, U.S. District Court, Southern District of
New York, No. 11-06193.
(Reporting by Nate Raymond; Editing by Grant McCool and Ken