[1]This week, First Horizon National Corp. [2] announced that First Tennessee, the regional bank for First Horizon, reached an agreement with HUD [3] and the U.S. Department of Justice [4] to settle claims related the mortgage business the company sold in 2008. As part of the settlement, First Tennessee has committed to make a cash payment of $212.5 million.
There are more than 170 First Tennessee Bank locations in and around Tennessee and 26 FTN Financial offices in the U.S., managed by 4,300 First Horizon employees.
In a press statement First Horizon discussed its plans to pay this expense, saying, “First Horizon previously reserved $50 million for this matter and expects to report a pre-tax expense of $162.5 million related to the agreement in principle in first quarter financial results.”
The agreement addresses claims made by HUD and U.S. Department of Justice related to the bank’s underwriting and origination of FHA-insured mortgage loans from January 1 2006 through December 31 2008, which have gone to claim no later than April 2, 2015. This agreement will be finalized by an execution of a formal written settlement agreement, and until then is still subject to negotiation by both parties.
“This is another major legal resolution as First Tennessee unwinds from the mortgage business the company sold in 2008. In the past several years First Tennessee has resolved a number of other legal matters related to its former mortgage business, and has sold substantial amounts of nonstrategic mortgage loans and mortgage servicing,” the company said.
First Horizon plans to announce its Q1 financial results next week.