Wells Fargo resolves $591-mn repurchase agreement Fannie Mae
31 December 2013
Housing mortgage giant Fannie Mae has reached a $591-million agreement with Wells Fargo to resolve repurchase requests on certain loans that originated prior to 2009.
After adjustments for prior repurchases, the San Francisco-based bank will pay Fannie Mae $541 million in cash and be released from repurchase liability for these loans.
Wells Fargo will remain obligated for certain other contractual responsibilities under the resolution agreement.
In addition to its agreement with Wells Fargo, Fannie Mae has reached resolutions this year with a number of lenders on repurchase issues.
These include a $10.3-billion agreement announced in January 2013 with Bank of America, a $968-million agreement announced in July 2013 with CitiMortgage, a $373-million agreement announced in October 2013 with SunTrust, a $670-million agreement announced in October 2013 with J P Morgan Chase, a $121.5 million agreement announced in November 2013 with Flagstar, a $140-million agreement with PNC reached in December 2013, and a $83-million agreement with HSBC Bank USA.
To resolve few repurchase claims, Wells Fargo agreed in September to pay a net $780 million to Freddie Mac saying it had set aside sufficient funds for the Fannie Mae settlement.
Fannie Mae and Freddie Mac are directed by its regulator, the Federal Housing Finance Agency (FHFA). The companies together own or guarantee two-thirds of US home loans.
''We have closed out our legacy repurchase reviews with this agreement,'' Fannie Mae chief executive Timothy 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,'' he added.
The US Treasury in 2008 rescued Fannie and Freddie as mortgage losses mounted.. The two received more than $150 billion in infusions to stay afloat.
They have become highly profitable over the past year and are close to having paid as much to the US in dividends as the government was forced to inject to stabilise the firms.