There is now yet another settlement in the mortgage loan industry to report. First Horizon National Corp. announced last week that it has entered into a definitive resolution agreement with Freddie Mac regarding loan repurchase issues. The agreement purportedly settles all representation and warranty claims related to loans sold by First Horizon to Freddie Mac from 2000 to 2008.
The settlement agreement follows an agreement with Fannie Mae that First Horizon entered into last year, and is part of First Horizon’s ongoing efforts to unwind the mortgage business the company sold in 2008. The amount that First Horizon will pay to settle its disputes with Freddie Mac was not disclosed, but public filings indicate that First Horizon released an additional $30 million of mortgage repurchase reserves in the fourth quarter of 2013, from the previously disclosed $195 million, and also increased its pending litigation reserve to $60.5 million from $21.1 million. First Horizon also lowered its total estimated potential liability from outstanding litigation to $180 million from $242 million in the third quarter of 2013.
The agreement is the latest in a string of settlements that banks have reached with Freddie Mac and its larger sibling, Fannie Mae.