In the wake of two recent adverse rulings, Goldman Sach Group Inc. will pay $1.2 billion to settle litigation with the Federal Housing Finance Administration over Goldman’s allegedly fraudulent sale of mortgage-backed securities to Fannie Mae and Freddie Mac from 2005 to 2007. This settlement is the largest penalty ever paid by Goldman, and brings the FHFA’s recovery from major banks to more than $21 billion. This deal reinforces that the FHFA’s litigation crusade, begun in 2011 against 18 banks and led by Philippe Selendy of Quinn Emanuel Urquhart & Sullivan, has been a monumental success.
Goldman will buy back mortgage securities that it sold to Fannie and Freddie for $3.15 billion, which is $1.2 billion more than their current market value. The settlement also releases claims against nine individuals who were sued. (The Fannie settlement is here, and the Freddie settlement is here.)
