Two more companies are in the clear with Freddie Macfollowing agreements on claims related to loans that went south after they were sold to the GSE.
Wells Fargo and SunTrust Mortgage are the two most recent companies to settle over claims regarding representations and warranties on single-family loans sold to the GSE. It was announced at the end of last month that Freddie Mac had also reached an agreement with Citigroup for the same issues. All agreements were approved by the Federal Housing Finance Agency (FHFA), acting in its capacity as Freddie Mac’s conservator.
Together, the three institutions are paying $1.3 billion to the enterprise. In exchange, they will be released from certain existing and future repurchase obligations for loans sold during the housing boom.
For its portion, San Francisco-based Wells Fargo has agreed to pay a total of $869 million, $89 million of which has already been credited for repurchases already made. The bank said in a statement it had “fully accrued for the cost of the agreement” as of the end of the second quarter. The agreement covers approximately 6.7 million loans.
A representative for Wells Fargo could not be reached for comment.
Under SunTrust’s agreement, the Richmond, Virginia-based company will pay the GSE a total of $65 million (minus credits of $25 million). As part of the settlement, it will be released from obligations on approximately 312,000 mortgages. While the majority of the settlement is covered by SunTrust’s repurchase reserves, the company expects to take a mortgage provision expense of $15 million for the third quarter.
“We are pleased to enter into this agreement with Freddie Mac as it marks another step in our resolution of legacy mortgage-related matters,” said SunTrust Mortgage CEOJerome Lienhard. “We continue to remain focused on providing high quality products and services to our mortgage clients.”
“With these settlements, Freddie Mac is recouping funds effectively due to the nation’s taxpayers,” said Freddie MacCEO Donald Layton. “We believe these settlements are equitable, and we are pleased to have resolved legacy repurchase issues with three of our valued customers.”