HSBC to Pay $550 Million to End Mortgage-Related Suit

By DEALBOOK SEPTEMBER 12, 2014 5:41 PMSeptember 12, 2014 5:51 pm

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HSBC is among several financial institutions that were sued over troubled mortgage securities.Credit Justin Lane/European Pressphoto Agency

HSBC agreed on Friday to pay $550 million to settle a lawsuit filed in 2011 by the Federal Housing Finance Agency, the federal regulator that oversees the government’s two mortgage finance companies, over troubled mortgage-backed securities sold in the lead-up to the financial crisis.

The housing finance agency has been pursuing litigation against a series of financial firms seeking relief for some of the big losses suffered by Fannie Mae and Freddie Mac after the housing market collapsed in 2008.


HSBC North America Holdings, the American unit of the London-based lender, sold mortgage-backed securities to Fannie Mae and Freddie Mac from 2005 to 2007. Those securities declined in value after homeowners defaulted on their loans.


HSBC is the 18th financial institution to reach a settlement with F.H.F.A.
Other big banks that have settled include JPMorgan Chase, Bank of America,Morgan Stanley and Deutsche Bank. General Electric, which had financial services units like GE Capital, also settled its case.


HSBC will pay $374 million to Freddie Mac and $176 million to Fannie Mae in the settlement.


“We are pleased to have resolved this matter,” Stuart Alderoty, senior executive vice president and general counsel for HSBC North America, said in a statement.


The bank noted that it had not been accused of fraud in the lawsuit, though other banks that have settled have had to pay penalties.


Cases involving Nomura and the Royal Bank of Scotland have not yet been resolved.

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