Barclays, Wachovia agree to mortgage settlements
The British bank Barclays and the former Charlotte-based bank Wachovia, now part of Wells Fargo, this week agreed to settle lawsuits related to the sale of residential mortgage-backed securities in the United States.
Barclays said in a news release Monday that it expected to book a charge of $325 million related to the settlements as part of its third-quarter results, which the bank will report Oct. 29.
The Barclays lawsuits were filed in 2012 by the National Credit Union Administration, a federal agency that regulates federal credit unions, and relate to the sale of so-called faulty residential mortgage-backed securities to corporate credit unions.
Once the settlements are completed, the National Credit Union Administration said it would seek to dismiss cases in federal courts in New York and Kansas.
The credit union regulator Monday also announced a $53 million settlement with Wachovia over the sale of residential mortgage-backed securities to credit unions. As in the lawsuit against Barclays, the credit union regulator had alleged that Wachovia had sold faulty mortgage securities to several credit unions, causing them losses during the financial crisis.
NCUA filed its suit against Wachovia in 2011. Wachovia did not admit fault, and once the pact is completed, the regulator will will dismiss pending claims in federal district courts in California, Kansas and New York.
A Wells Fargo spokeswoman said the bank was pleased to have the matter resolved.
Barclays also didn’t admit fault as part of the settlement, the National Credit Union Administration said.
“In order to help minimize losses and future costs to the credit union system, NCUA is committed to pursuing recoveries against financial firms we maintain contributed to the corporate crisis,” Debbie Matz, the National Credit Union Administration chairwoman, said in a news release.
“The agency has a statutory obligation to secure recoveries for credit unions and ensure that consumers remain protected, and we take that responsibility very seriously,” she added.
The NCUA is pursuing lawsuits in California, Kansas and New York against a number of financial firms, including Credit Suisse, Goldman Sachs, Morgan Stanley and UBS, over the sale of what it claims were faulty securities that caused the collapse of five corporate credit unions.
The credit union regulator said in a news release that its litigation against banks over the sale of faulty mortgage securities has recovered more than $2.2 billion, with the proceeds going toward reducing contributions to a fund to cover losses incurred by the five failed credit unions.
Like many financial firms, Barclays is facing several lawsuits and regulatory actions about the sale and securitization of U.S. mortgages before the financial crisis.
From 2005 to 2008, Barclays sponsored and underwrote about $39 billion in U.S. mortgage securitizations and sold $19.4 billion in loans that were originated and sold to third parties by affiliates of an entity it acquired in 2007, according to a disclosure it issued in July as part of its second-quarter results.
The lender said Monday that it “continues to litigate” several lawsuits related to residential mortgage-backed securities and “to respond to requests from various regulatory and governmental authorities” in the matter.
This story was originally published October 20, 2015 at 11:12 AM with the headline "Barclays, Wachovia agree to mortgage settlements."