UBS to settle housing claims in US

22 July 2013

UBS has reached an agreement in principle with the US Federal Housing Finance Agency (FHFA) to settle claims that it mis-sold mortgage investments between 2004 and 2007, joining a list of other banks in admitting culpability.

The revelation of a settlement was made during UBS’ second quarter profits announcement previewed on 22 July, when the Swiss bank admitted it has allocated CHF865m Swiss francs to cover litigation costs, of which CHF100m relates to a deal with UK authorities to disclose details of British tax evaders and settle unpaid taxes.

UBS is one of 18 banks against which the FHFA has filed cases, as it seeks to recoup money owed to government-controlled housing giants Federal National Mortgage Association (aka Fannie Mae) and Federal Home Loan Mortgage Corporation (Freddie Mac), which were taken into ‘conservatorship’ public bodies in 2008 to prevent their collapse.

The FHFA alleged that UBS had misrepresented the quality of loans underlying around US$6.4bn of residential-mortgage-backed securities in which Fannie Mae and Freddie Mac had invested between September 2005 and August 2007, according to court documents released in April.

Become a bobsguide member to access the following

1. Unrestricted access to bobsguide
2. Send a proposal request
3. Insights delivered daily to your inbox
4. Career development