GE Settles with FHFA for Alleged MBS Misrepresentations
General Electric has settled a lawsuit with the Federal Housing Finance Agency over allegations that the company misled Freddie Mac into buying $549 million of faulty mortgage-backed securities, Reuters reported Jan. 23.
This settlement is the first from a series of lawsuits that the FHFA filed against Wall Street banks in 2011 through its role as conservator for Fannie Mae and Freddie Mac.
The lawsuit alleged that GE and 17 other financial institutions were responsible for Fannie’s and Freddie’s losses on more than $200 billion in MBS. They argued that GE misrepresented the quality of loans in two MBS it sold in 2005.
Terms of the settlement between GE and the FHFA were not released.