Wells Fargo Settles With Freddie Mac For $869 Million

Because a few days can’t go by without one of the few remaining big banks agreeing to pay out hundreds of millions of dollars (without ever admitting any wrongdoing), Wells Fargo has agreed to settle with Freddie Mac for $869 million over — you guessed it — toxic mortgages from the Bubble Era.

Bailed-out mortgage-backers Freddie Mac and Fannie Mae have demanded that Wells buy back billions in toxic loans that were sold off to the companies, mostly during the pre-splat years of 2006 to 2008.

Wells has not yet reached an agreement with Fannie, but did come to terms with Freddie late last week on the $869 million number, which the company says “resolves substantially all repurchase liabilities related to loans sold” to Freddie before 2009.

The actual amount to be paid back to Freddie is slightly less — around $780 million — as Wells had already bought back close to $90 million in loans before the settlement was reached.

This is just the latest in big-ticket buybacks by the nation’s largest lenders. Earlier this summer, Citigroup agreed to repurchase $968 million in loans from Fannie Mae, and last week came to terms with Freddie for $395 million in buybacks.

Wells is still facing a substantial lawsuit by the federal government, which claims that the bank misled the Dept. of Housing and Urban Development about the merits of hundreds of millions of dollars in home loans in order to qualify the mortgages to be FHA-insured. Last week, a federal court denied the bank’s request for dismissal in that case. If it goes to trial, the government could seek triple the damages.

Want more consumer news? Visit our parent organization, Consumer Reports, for the latest on scams, recalls, and other consumer issues.