The Zacks Analyst Blog Highlights: U.S. Bancorp, Freddie Mac, Fannie Mae, Bank of America and Wells Fargo
For Immediate Release
Chicago, IL – December 12, 2013 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include the U.S. Bancorp (USB-Free Report), Freddie Mac (FMCC-Free Report), Fannie Mae (FNMA-Free Report), Bank of America Corporation (BAC-Free Report) and Wells Fargo & Company (WFC-Free Report)
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Here are highlights from Wednesday’s Analyst Blog:
U.S. Bancorp, Freddie Mac in Settlement
U.S. Bancorp (USB-Free Report) announced a lawsuit settlement with Freddie Mac (FMCC-Free Report) worth about $53 million. The settlement includes the resolution of all outstanding and potential repurchase claims related to misrepresentation of loans originated and sold by U.S. Bancorp directly to Freddie Mac from 2000 to 2008.
The Minneapolis-based banking major will shell out the total amount in cash to Freddie Mac, including adjustments related to credits, along with previous buybacks. The settlement amount will be paid from U.S. Bancorp’s current reserves.
Freddie Mac, along with Fannie Mae (FNMA-Free Report) can compel banks to buy back mortgages that do not abide by the prescribed guidelines. Notably, since 2009, both these government-sponsored enterprises (GSEs) compelled many lenders to repurchase bad loans worth billions of dollars. Additionally, the Federal Housing Finance Agency (:FHFA) – the conservator for these two firms – has set a goal to complete review of all loan files for breaches of representations and warranties related to loan activity prior to 2008.
U.S. Bancorp is not the first bank to reach a settlement with these regulatory agencies. In Jan 2011, Bank of America Corporation (BAC-Free Report) signed a $3 billion agreement with Freddie Mac and Fannie Mae to resolve faulty mortgage loans sold by Countrywide Financial Corp. BofA had acquired Countrywide in 2008.
Moreover, earlier this year, BofA agreed to settle its mortgage dispute with Fannie Mae. The company paid $11.6 billion in total, which included $6.7 billion of loan repurchases.
Over the last several months, Freddie Mac reached settlements with several other banks, including Wells Fargo & Company (WFC-Free Report). The compensation from these companies totaled approximately $2.5 billion.
These settlements by banks demonstrate their aim to resolve all mortgage-related issues and thereby reduce costs over the coming period. Moreover, such settlements are expected to help in revival of the economy. Alongside, these strategic decisions will likely bode well for banks and help in boosting investors’ confidence.
U.S. Bancorp currently carries a Zacks Rank #3 (Hold).
Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.
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