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FHFA reaches $280 million RMBS settlement with Barclays

RMBS settlement total now exceeds $16 billion

The Federal Housing Finance Agency has settled another of its outstanding lawsuits against some of the biggest banks in the world, alleging that the banks sold private-label residential mortgage-backed securities to Fannie Mae and Freddie Mac without disclosing the toxic nature of some of the loans.

The FHFA, as conservator of Fannie and Freddie, settled with Barclays Bank PLC (BARC) to the tune of $280 million. Per the terms of the settlement agreement, Barclays will pay $227 million to Freddie and $53 million to Freddie.

The settlement agreement states, “that the parties (FHFA and Barclays) shall jointly file a stipulation of voluntary dismissal with prejudice of the Barclays action within one business day of the GSEs’ receipt of the settlement payment.”

The settlement agreement states that the parties anticipate the settlement payment to be made on or before May 7.

“We are pleased to have resolved this matter regarding legacy RMBS-related activities that pre-date the financial crisis of 2008," Barclays said in a statement. "The settlement will not impact our 2014 earnings.”

According to the FHFA, this marks the 13th settlement of the 18 lawsuits originally filed. To date, the FHFA has settled with General Electric for $6.25 million, CitiGroup Inc. for $250 million, UBS Americas, Inc. for $885 million, J.P. Morgan Chase for $4 billion, Deutsche Bank for $1.925 billion, Ally Financial for $475 million, Morgan Stanley for $1.25 billion, SG Americas for $122 million, Credit Suisse Holdings for $885 million and Bank of America, Merrill Lynch and Countrywide Financial for $5.83 billion.

In a non-litigation settlement, the FHFA also recovered $335.23 million from Wells Fargo.

The lawsuits still remaining unsettled are against First Horizon National Corp., Goldman Sachs, HSBC North America, Nomura Holding America, and The Royal Bank of Scotland Group.

With the Barclays settlement, the total recovered by the FHFA exceeds $16 billion.

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