By Jonathan Stempel
Dec 30 Wells Fargo & Co will pay a net
$541 million to Fannie Mae to settle claims over defective home
loans, completing the government-controlled mortgage company's
efforts to have banks buy back troubled loans made before the
Fannie Mae said on Monday it has reached
settlements worth roughly $6.5 billion over loan buybacks with
eight banks, including Wells Fargo, the nation's largest
mortgage lender and fourth-largest bank by assets.
The settlements include a $3.6 billion accord in January
with Bank of America Corp over loans from that bank and
the former Countrywide Financial Corp. Fannie Mae Chief
Executive Timothy Mayopoulos was once general counsel at Bank of
It also includes a $968 million accord in July with
In the Wells Fargo settlement, the San Francisco-based bank
will pay Fannie Mae $541 million in cash after adjusting for
credits from prior repurchases. Before adjustments, the
settlement totaled $591 million.
The accord resolves substantially all repurchase claims
against Wells Fargo over loans sold to Fannie Mae that were made
"We have closed out our legacy repurchase reviews with this
agreement," Mayopoulos said in a statement. "This agreement
represents a fitting conclusion to our year of hard work to put
legacy issues in the rear view mirror and begin 2014 focused on
improving the future of housing finance."
Wells Fargo agreed in September to pay a net $780 million to
the smaller Freddie Mac to resolve similar repurchase
claims. It said it had set aside sufficient funds for the Fannie
Fannie Mae and Freddie Mac were directed by its regulator,
the Federal Housing Finance Agency (FHFA), to reduce outstanding
loan repurchase demands by year end, and have been reaching many
agreements with individual lenders.
Banks can be forced to buy back home loans if
representations and warranties concerning the underwriting and
whether borrowers could afford to make payments prove false.
Freddie Mac did not immediately respond on Monday to a
request for comment on its repurchase efforts.
The FHFA is also pursuing lawsuits against many banks over
mortgage securities sold to Fannie Mae and Freddie Mac.
Fannie Mae and Freddie Mac own or guarantee two-thirds of
U.S. home loans. The government seized them on Sept. 7, 2008 and
put them into a conservatorship. As of last month, taxpayers had
nearly broken even on the bailout.