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FHFA announces $1.9B settlement with Deutsche Bank

Settlement resolves legacy mortgage securities claims

rope money

The Federal Housing Finance Agency inked a $1.9 billion settlement with Deutsche Bank (DB) Friday, settling claims related to alleged violations of federal and state securities laws.

The deal resolves another private-label mortgage-backed securities lawsuit filed against a major bank by the FHFA on behalf of Fannie Mae and Freddie Mac.

It ties back to claims that Deutsche Bank sold the two government-sponsored enterprises toxic loans while misrepresenting the overall quality of the pools.

The settlement effectively ends the FHFA v. Deutsche Bank lawsuit and resolves issues related to MBS purchased by the GSEs between 2005 and 2007.

As part of the agreement, Freddie Mac will receive $1.63 billion from Deutsche Bank, while Fannie will pocket $300 million.

This is the sixth settlement reached in relation to the 18 private-label MBS lawsuits filed against banks back in 2011.

While the deal puts this issue behind Deutsche, it does release the bank from claims associated with the LIBOR – interest rate setting scandal or from claims in two other lawsuits involving mortgage securities – FHFA v. SC Americas and FHFA v. Countrywide Financial Corp.

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