Washington: A US regulator on Thursday said it reached an USD 885 million settlement with UBS over allegations the bank misrepresented mortgage-backed bonds that were sold to Fannie Mae and Freddie Mac during the housing bubble.
Under the terms of the agreement with the Federal Housing Finance Agency, UBS must pay about USD 415 million to Fannie Mae and USD 470 million to Freddie Mac to resolve claims related to securities sold to the companies between 2004 and 2007. The Swiss banking giant did not admit to any liability or wrongdoing in settling the allegations. On Monday, it said it had reached an agreement in principle with the FHFA.
Fannie Mae and Freddie Mac were seized by the US government in 2008 as the housing crisis threatened their solvency. They have received USD 187.5 billion in taxpayer funds to stay afloat.
UBS is just one of 18 banks the FHFA pursued in 2011 for allegedly misrepresenting the quality of the collateral backing securities during the run-up to the financial crisis. The regulator is seeking to recover losses on mortgage bonds sold to Fannie Mae and Freddie Mac, which could result in the recovery of billions of dollars.
Citigroup and General Electric have already settled with the FHFA for undisclosed sums.
First Published: Friday, July 26, 2013, 09:17