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Report: RBS May Pay More in FHFA Settlement

paying-moneyRoyal Bank of Scotland (RBS) may have to pay additional penalties to settle claims that it sold faulty U.S. mortgage-backed securities in the years leading up to the housing market crash, according to a report from Reuters.

RBS had already set aside the equivalent of about $3 billion in U.S. dollars to cover settlement costs relating to the sale of $32 billion worth of faulty mortgage-backed securities to Fannie Mae and Freddie Mac in a case being handled by the U.S. District Court in Connecticut. However, the conservator of the two GSEs, the Federal Housing Finance Agency (FHFA), might ask the bank to pay up to the equivalent of $7.7 billion in U.S. money to settle the claims, according to the report.

A spokesperson from FHFA declined to comment on the RBS situation.

In June, RBS agreed to pay $99.5 million to settle a separate FHFA suit claiming that the bank sold more than $2 billion worth of faulty mortgage-backed securities to Fannie Mae and Freddie Mac between 2005 and 2007, the years of the "housing bubble" in the U.S.

RBS and Nomura Holdings are the last two out of the 18 lenders to settle with FHFA after the agency sued the lenders in 2011 to recoup U.S. taxpayer costs following the government's $188 billion bailout of Fannie Mae and Freddie Mac in 2008. The other 16 lenders have paid about $24 billion to settle claims, including $9.3 billion paid by Bank of America in March 2014.

About Author: Seth Welborn

Seth Welborn is a Harding University graduate with a degree in English and a minor in writing. He is a contributing writer for MReport. An East Texas Native, he has studied abroad in Athens, Greece and works part-time as a photographer.
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