August 27, 2014

FHFA, Goldman Sachs settle for $3.15B

Aug. 26, 2014 – The Federal Housing Finance Agency announced a settlement with Goldman Sachs worth $3.15 billion, in the wake of allegations the company violated federal and state securities law relating to private-label mortgage-backed securities (PLS).

The violations are alleged to have taken place between 2005 and 2007, during the financial crisis, and related to PLS purchased by Fannie Mae and Freddie Mac. Under the settlement terms, Goldman Sachs will pay approximately $2.15 billion to Freddie and approximately $1 billion to Fannie, which the FHFA says will "effectively" make the government-sponsored entities whole on their investments in the securities in question.

FHFA said this was the sixteenth settlement out of 18 filed by the agency in 2011.

Earlier this month, FHFA requested comments on its strategic plan for fiscal years 2015-2019, which addresses, among other things, the agency's work on a single security structure for Fannie Mae and Freddie Mac. Comments are due Sept. 15, and NAFCU plans to submit input. Members interested in providing feedback to the association can contact Regulatory Affairs Counsel Alicia Nealon at NAFCU continues to advocate for ensuring government-guaranteed access to the secondary mortgage market for credit unions, and pricing based on loan quality rather than volume.