Wells Fargo & Co., the largest U.S. home lender, agreed to pay Fannie Mae $591 million to resolve repurchase demands on loans originated before 2009 and sold to the government-backed firm.
Wells Fargo paid $541 million in cash to Fannie Mae after adjusting for prior repurchases, the San Francisco-based lender said Monday in a statement. The firm had set aside funds to cover the full cost as of Sept. 30, according to the statement.
Lenders from Wells Fargo to Bank of America Corp. have agreed to pay Fannie Mae and its smaller competitor, Freddie Mac, for losses on soured mortgages as they seek to cap costs on loans originated before the housing crash. Wells Fargo reached a $869 million accord with Freddie Mac in September to resolve disputes on a similar subset of loans.
Wells Fargo will continue to face other obligations tied to the loans and while it will be released from repurchase liabilities, there are some exceptions, according to a separate statement from Washington-based Fannie Mae. The settlement concludes Fannie Mae’s review of “legacy” loans sold to it by mortgage lenders, the firm said.
“This agreement represents a fitting conclusion to our year of hard work to put legacy issues in the rear-view mirror and begin 2014 focused on improving the future of housing finance,” Timothy J. Mayopoulos, Fannie Mae’s chief executive officer, said in the firm’s statement.
Bank of America, the second-largest U.S. lender, agreed in January to an $11.7 billion package designed to resolve most mortgage disputes with Fannie Mae. The accord included a $3.6 billion cash payment, according to a statement. Citigroup Inc. agreed in July to pay Fannie Mae $968 million to compensate the firm for faulty home loans made from 2000 to 2012 and sold to the mortgage firm.
Wells Fargo faced repurchase demands at the end of September on about $958 million in mortgages, or 4,422 loans, sold to government-sponsored entities, according to its third-quarter securities filing. About 80 percent of those were loans originated in 2006 through 2008.