Credit Suisse to pay $885 million in FHFA mortgage fraud case

Fri Mar 21, 2014 4:20pm EDT
 
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By Nate Raymond and Silke Koltrowitz

NEW YORK/ZURICH (Reuters) - Credit Suisse Group AG CSGN.VX has agreed to pay $885 million to resolve claims by a U.S. regulator that the Swiss bank misled Fannie Mae FNMA.OB and Freddie Mac FMCC.OB into buying mortgage-backed securities that later went sour.

The settlement announced on Friday would resolve 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.

It is the ninth settlement that the FHFA has reached in litigation that began in 2011, when it filed 18 lawsuits over some $200 billion in mortgage-backed securities, an investment product at the center of the recent global financial crisis.

The accord resolves claims pending in New York federal court against Credit Suisse over $16.6 billion of securities sold to Fannie and Freddie, and ends what the Swiss bank called the largest mortgage-related investor litigation it still faced.

Credit Suisse will pay $234 million to Fannie Mae and $651 million to Freddie Mac, the FHFA said.

So far, the FHFA has recovered more than $10.1 billion from banks over similar securities.

This includes nearly $9.8 billion in settlements of litigation with such banks as JPMorgan Chase & Co (JPM.N: Quote), Citigroup Inc (C.N: Quote), Deutsche Bank AG (DBKGn.DE: Quote), Morgan Stanley (MS.N: Quote) and Societe Generale (SOGN.PA: Quote).

The FHFA also reached a separate $335.2 million accord with Wells Fargo & Co (WFC.N: Quote), which it did not formally sue.   Continued...

 
The logo of Swiss bank Credit Suisse is seen at an office building in Zurich October 24, 2013. REUTERS/Arnd Wiegmann