By Andrew R. Johnson
Tennessee-based lender First Horizon National Corp. said
Thursday it reached an agreement in a dispute over home loans it
sold to government-backed mortgage firm Freddie Mac.
The amount that First Horizon will pay to settle its differences
with Freddie Mac wasn't disclosed, though the bank said in a
regulatory filing that the agreement and other legal developments
will result in a reduction in the company's profit for 2013.
The agreement is the latest in a string of settlements that
banks have reached with Freddie Mac and its larger sibling, Fannie
Mae.
Freddie Mac and Fannie Mae don't lend money to consumers, but
buy mortgages from banks and sell them to investors in the form of
securities. The firms' agreements allow them to require banks to
buy back loans that don't meet underwriting guidelines.
Those so-called representation and warranty requests have been a
major headache for banks since the financial crisis. Last year,
several lenders, including Fifth Third Bancorp., SunTrust Banks
Inc., PNC Financial Services Group Inc. and Citigroup Inc. reached
agreements with Fannie Mae or Freddie Mac to resolve such
requests.
First Horizon said in October that it had set aside $200 million
in its reserves for loan repurchases based on an agreement it had
reached with Fannie Mae and estimates for future losses related to
Freddie Mac.
Write to Andrew R. Johnson at andrewr.johnson@wsj.com
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