The Federal Housing Finance Agency [1] (FHFA), serving as the conservator of Fannie Mae and Freddie Mac, announced a settlement for $110 million with First Horizon National Corporation [2]. The settlement [3] resolves alleged violations of securities laws in connection with private-label mortgage-backed securities (PLS) purchased by Fannie Mae and Freddie Mac from 2005-2007.
The legal document in the case noted, "This Agreement does not constitute an admission by any of the First Horizon Defendants of any liability or wrongdoing whatsoever, including, but not limited to, any liability or wrongdoing with respect to any of the allegations that were or could have been raised in the First Horizon Action."
Per the agreement, First Horizon will pay $61.6 million to Fannie Mae and $48.4 million to Freddie Mac.
In a statement [4], First Horizon CEO Bryan Jordan said the settlement represents "another big step forward" in the company's efforts to move away from its former mortgage businesses. The bank does not expect to the agreement to impact its second-quarter earnings in a material way, thanks to an established reserve and insurance for a portion of the settlement.
As previously reported, FHFA most recently settled [5] with Barclays Bank for $280 million. The government agency has previous settlements with Bank of America, Credit Suisse, Société Générale, and Morgan Stanley.
This settlement is the 14th settlement of its kind, stemming from 18 PLS lawsuits the FHFA filed in 2011. The government agency said, "FHFA remains committed to satisfactory resolution of the remaining actions."