HSBC Holdings plc (ADR) (NYSE:HSBC) and its affiliates agreed to settle the lawsuit filed by the Federal Housing Finance Agency (FHFA) involving private-label mortgage-backed securities purchased by the government-sponsored enterprises (GSEs).
HSBC settlement agreement
According to the FHFA, HSBC North America Holdings agreed to pay $550 million to resolve allegations that it violated federal, Virginia and District Columbia securities laws related to the private-label mortgaged-backed securities acquired by GSEs, Fannie Mae/ Federal National Mortgage Assctn Fnni Me (OTCBB:FNMA) and Freddie Mace/ Federal Home Loan Mortgage Corp (OTCBB:FMCKM) from 2005 to 2007.
Under the settlement agreement, Fannie Mae/ Federal National Mortgage Assctn Fnni Me (OTCBB:FNMA) will receive a payment $176 million while Freddie Mace/ Federal Home Loan Mortgage Corp (OTCBB:FMCKM) will get $374 million.
Clint Carlson's hedge fund, Carlson Capital's Double Black Diamond strategy, gained 1.04% net of fees in the month of September. Following this performance, the fund has returned 9.87% net of fees for the year to the end of the month. Q3 2021 hedge fund letters, conferences and more The Double Black Diamond strategy makes up Read More
The FHFA said HSBC Securities is required to release the payment within fifteen days of the execution date of the settlement.
HSBC resolves case without an admission of any liability/wrongdoing
The settlement agreement does not constitute an admission of any liability or wrongdoing on the part of HSBC North America Holdings and its affiliates. In fact, the company denied the allegations of the FHFA or the GSEs.
The parties agreed that the settlement agreement shall not be used in any proceeding for any purpose including as evidence of liability or wrongdoing by any HSBC defendant, for impeachment purposes, to refresh recollection or any other evidentiary purpose.
HSBC – Two lawsuits still unresolved
In 2008, the United States government place Fannie Mae/ Federal National Mortgage Assctn Fnni Me (OTCBB:FNMA) and Freddie Mace/ Federal Home Loan Mortgage Corp (OTCBB:FMCKM) under the conservatorship of the FHFA to prevent its collapse.
In 2011, the FHFA as conservator of the GSEs filed actions against HSBC North America Holdings and its affiliates in the United States Court for the Southern District of New York. The agency said two of the 18 lawsuits filed are still unresolved, and it continues to pursue reasonable resolutions for those actions.
Other major banks settled the complaints filed by FHFA related to private-label mortgage-backed securities. Last month, Goldman Sachs Group Inc (NYSE:GS) agreed to pay $3.2 billion to resolve the case filed by the GSEs’ conservator while Bank of America Corp (NYSE:BAC) agreed to a 9.5 billion settlement.