In last trading session, the stock price of Federal Home Loan Mortgage Corp (OTCBB:FMCC) declined 2.65% to close the week at $2.20. The decline came at a share volume of 1.2 million compared to average monthly share volume of 1.6 million. Recently, the FHFA reported that Royal Bank of Scotland Group Plc and Nomura Holdings Inc have accepted to pay up to $33 million for making false statements while offering mortgage-backed securities.
This agreement with the FHFA was revealed in court papers submitted last week in Manhattan federal court and includes legal costs the regulator had to borne taking the banks to court trials earlier in 2015. The regulatory body had sued the two banks in its role as conservator for Federal Home and Fannie, which had purchased $2 million in mortgage securities from them ahead of financial crisis.
After completing a non-jury trial, the U.S. District Judge Mr. Denise Cote found RBS, an underwriter and Nomura, the securities’ sponsor, liable. The judge announced $806 million compensation to the FHFA and also awarded the regulator its attorney’s fees and costs, sums that Friday’s deal covers.
Under the deal, the two banks will compensate $33 million if after a petition they compensate at least $413 million for violating state laws as asserted by the FHFA. If that compensation shrinks to above $272 million, the two parties will allow judge to decide how much up of agreed amount should be paid. However, any amount less than $272 million will turn the deal void. This lawsuit was the first one to reach trial of the eighteen lawsuits the regulator FHFA had submitted in 2011 over mortgage-backed securities that different banks sold to Federal Home Loan Mortgage Corp (OTCBB:FMCC) and Fannie Mae.
Prior to that, the FHFA received almost $17.9 billion in major settlements from institutions like Bank of America Corp and JPMorgan Chase & Co.