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Barclays to pay $280 million to settle mortgage bond claims

Published 24/04/2014, 22:14
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By Nate Raymond and Margaret Chadbourn

NEW YORK/WASHINGTON (Reuters) - Barclays Bank PLC L:BARC will pay $280 million (166.6 million pounds) to Fannie Mae OB:FNMA and Freddie Mac OB:FMCC to settle claims that it sold them faulty mortgage-backed securities during the housing bubble, a U.S. regulator said on Thursday.

The settlement announced on Thursday resolves claims in two lawsuits filed in New York by the Federal Housing Finance Agency (FHFA), the conservator since 2008 for the government-controlled mortgage companies.

The deal marked the 11th settlement the FHFA has reached in litigation that commenced in 2011 when the agency filed 18 lawsuits over about $200 billion in mortgage-backed securities, an investment product at the centre of the recent global financial crisis.

The FHFA's main case against Barclays accused the British bank of misleading Fannie Mae and Freddie Mac into buying $4.9 billion in mortgage-backed securities that later went sour.

As part of the deal, Barclays will pay $227 million to Freddie Mac and $53 million to Fannie Mae, the FHFA said.

Barclays said in a statement it was pleased to have reached a settlement and added it would not impact the bank's 2014 earnings.

To date, the FHFA has recovered $15.9 billion in direct connection with the lawsuits over similar securities, a spokeswoman for the agency said.

The accord with Barclays follows a $9.3 billion settlement last month with Bank of America CorpN:BAC. Of that sum, $5.83 billion stemmed from claims in the 2011 lawsuits, the FHFA said.

Other banks that have reached settlements include JPMorgan Chase & CoN:JPM, Citigroup IncN:C, Deutsche Bank AGDE:DBKGn and Morgan StanleyN:MS.

The FHFA also reached a separate $335.2 million accord with Wells Fargo & CoN:WFC, which it did not formally sue.

U.S. District Judge Denise Cote, who is overseeing all but one of the remaining lawsuits, has scheduled September trial dates for Goldman Sachs Group Inc N:GS and HSBC Holdings plcL:HSBA.

The FHFA in a statement said it "remains committed to satisfactory resolution of the remaining actions."

The case is Federal Housing Finance Agency v. Barclays Bank Plc, et al, U.S. District Court, Southern District of New York, No. 11-06190.

(Reporting By Margaret Chadbourn; Editing by Chris Reese and Diane Craft)

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