Saturday, July 27, 2013

UBS Pays $885 Million Dollar Mortgage Fraud Penalty

UBS has agreed to pay an $885 million fine to U.S. mortgage regulators to settle allegations it defrauded the government. UBS is the third of 18 banks sued by the Federal Housing Finance Agency (FHFA) to settle but the first whose fine payment is known. Citigroup and General Electric paid undisclosed amounts to resolve FHFA litigation earlier this year.

 

The suits, filed in 2011, accuse banks and other mortgage underwriters of misleading Fannie Mae and Freddie Mac, two FHFA agencies, about pooled mortgages totaling over $200 billion in value. The firms systematically overstated the financial health of the pooled loans when selling them, the suits allege. UBS sold Fannie Mae and Freddie Mac a total of over $6 billion worth of mortgage-backed securities. Citi, GE, and UBS account for a relatively small portion of the total amount in question, at around $10 billion combined. Other firms whose alleged fraud was much larger are likely to continue fighting the lawsuits. Bank of America is on the hook for over $40 billion worth of misrepresentations to the government because of its purchase of Merrill Lynch and Countrywide.

 

For more information - Big Bank Pays $885 Million Fine For Mortgage Fraud

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