Dec. 30--Wells Fargo & Co. said today it will make a one-time cash payment of $541 million to Fannie Mae as part of an agreement related to loans sold to the federal agency before 2009.
The payment is required to be made in the fourth quarter, or by Tuesday.
The bank and Fannie Mae said the agreement was for $591 million overall. Wells Fargo was given credits for certain previous repurchases totaling about $50 million.
According to Bloomberg News, several large banks agreed to pay Fannie Mae and its smaller competitor, Freddie Mac, for losses on soured mortgages as they seek to cap costs on loans originated before the housing crash began in 2009.
The bank said in its statement that the agreement "resolves substantially all repurchase liabilities related to loans sold to Fannie Mae that were originated prior to Jan. 1, 2009."
However, Fannie Mae said in its statement there remains "certain exceptions" in the agreement that were identified as "other contractual responsibilities."
Wells Fargo said it fully accrued for the cost of the agreement in the third quarter.
"We have closed out our legacy repurchase reviews with this agreement with Wells Fargo," said Timothy Mayopoulos, president and chief executive of Fannie Mae.
"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."
Wells Fargo reached an $869 million accord with Freddie Mac in September to resolve disputes on a similar subset of loans.
Other agreements reached by Fannie Mae this year include:
A $10.3 billion agreement announced in January with Bank of America including resolution of repurchase issues on certain loans, transfer of servicing rights on 941,000 loans, and repurchase of 30,000 loans by the bank. The agreement also included a $1.3 billion compensatory fee payment for servicing obligations.
Other agreements to resolve repurchase issues on certain loans include: CitiMortgage, $968 million in July; J.P. Morgan Chase & Co., $670 million in October; SunTrust Banks Inc., $373 million in October; PNC Financial Services Group Inc., $140 million in December; Flagstar, $121.5 million in December; and HSBC Bank USA, $83 million in December.
(c)2013 Winston-Salem Journal (Winston Salem, N.C.)
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Distributed by MCT Information Services
Original headline: Wells Fargo to settle with Fannie Mae for losses on mortgages before '09
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