Oversight

RBS to pay $99.5 million in FHFA mortgage-backed securities settlement

RBS logo(1)The Federal Housing Finance Agency (FHFA) announced last week a $99.5 million settlement with RBS Securities over alleged federal and state securities violations related to residential mortgage-backed securities (MBS).

In September 2011, the FHFA filed suit against Ally Financial and 16 other banking institutions and underwriters, including RBS, over allegations that the companies misrepresented and sometimes fraudulently sold securities to Fannie Mae and Freddie Mac, which sustained massive losses and are now held in conservatorship by the FHFA, between 2005 and 2007.

Last week’s settlement is the 15th among the banks being sued by the FHFA. In addition to RBS, to date, the FHFA has reached settlements with General Electric, Citigroup, UBS, JPMorgan Chase, Deutsche Bank, Ally Financial, Morgan Stanley, SG Americas, Credit Suisse, Bank of America, Merrill Lynch, Countrywide Financial, Barclays and First Horizon.

The FHFA, which was established under the 2010 Dodd-Frank Act, said the settlement does not affect a separate pending suit against RBS in Connecticut, which the regulator said also relates to securities.

Dodd-Frank authorized the FHFA director to place the government mortgage giants under conservatorship. The FHFA took control of Fannie and Freddie’s operations in 2008.

Currently, the FHFA still has pending cases related to mortgage securities against Goldman Sachs, HSBC and Nomura.

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