HSBC Agrees to Pay $550 Million to End U.S. Mortgage Claims

By Dakin Campbell, Michael J. Moore and Clea Benson

HSBC Holdings Plc (HSBA) will pay $550 million to resolve accusations of misconduct in its handling of mortgage securities sold to taxpayers before the financial crisis.
The U.S. unit of the London-based lender, HSBC North America Holdings Inc., reached the deal to end Federal Housing Finance Agency claims that the firm sold faulty mortgage bonds to Fannie Mae and Freddie Mac from 2005 to 2007, the bank said today in a statement. Fannie Mae will receive $176 million and Freddie Mac will get $374 million, according to a separate statement from FHFA.
“We are pleased to have resolved this matter,” Stuart Alderoty, general counsel for HSBC’s U.S. unit, said in the statement. All principal and interest payments have been made on the securities at issue in the settlement, the bank said.
The FHFA sued 18 banks in 2011 to recoup taxpayer
costs after the U.S. seized control of the failing mortgage-finance companies in 2008. Seven firms, including JPMorgan Chase & Co. (JPM) and Deutsche Bank AG, agreed to pay a total of almost $8 billion last year to settle claims they made misrepresentations about mortgages underlying securities bought by Fannie Mae and Freddie Mac in the run-up to the crisis.

BofA Settlement

Last month, Goldman Sachs Group Inc. agreed to pay $3.15 billion, representing a premium of about $1.2 billion, to repurchase residential mortgage-backed securities. Morgan Stanley agreed in February to pay $1.25 billion as part of a settlement over $10.6 billion in securities.
Bank of America Corp. announced a $9.5 billion accord in March, including paying $6.3 billion in cash to Fannie Mae and Freddie Mac and buying back $3.2 billion of mortgage bonds from them. The housing-finance companies bought about $57 billion of bonds from Bank of America and its predecessor firms.
All but two of the 18 lawsuits FHFA filed in 2011 have been resolved, the agency said. Fannie Mae and Freddie Mac received $187.5 billion in U.S. aid and have returned more than $200 billion under terms of their federal conservatorship.