Credit Suisse Group has agreed to pay $885 million to settle lawsuits brought by the Federal Housing Finance Agency (FHFA) over faulty mortgages sold to Fannie Mae and Freddie Mac from 2005 to 2007.
Under the terms of the agreement, Credit Suisse will pay approximately $234 million to Fannie Mae and approximately $651 million to Freddie Mac. In exchange, certain claims against Credit Suisse related to the securities involved will be released.
This is the ninth settlement the FHFA has announced in relation to the 18 lawsuits the agency filed in 2011 over faulty mortgage-backed securities.
Following announcement of the settlement, the Zurich-based bank – Switzerland's second-largest – said it would book a charge of 275 million francs ($312 million) after taxes in the fourth quarter of 2013, resulting in a restatement of results to a net loss of 8 million francs for the period, Bloomberg News reports.
So far the nine companies that have settled – including JPMorgan, Deutsche Bank and UBS – have agreed to pay more than $9.2 billion to settle similar lawsuits brought by the FHFA.
Credit Suisse still faces lawsuits brought by New York and New Jersey over the sale of faulty MBS. In December, the State of New Jersey sued Credit Suisse over claims the bank misrepresented the risk to investors on more than $10 billion in residential MBS. In addition, New York Attorney General Eric Schneiderman brought similar claims. Both cases are pending.
Last month, the FHFA announced that it had reached a settlement with another one of the 11 banks sued – SociÃ©tÃ© GÃ©nÃ©rale – for $122 million. That lawsuit was to resolve the sale of faulty MBS to Fannie Mae and Freddie Mac in 2006.
In settling the lawsuits, each of the banks admitted no wrongdoing and no criminal charges were brought.