RBS, Nomura lose final appeal, must pay $839M over mortgage-backed securities

On Monday, the U.S. Supreme Court declined to hear an appeal by the Royal Bank of Scotland Group and Nomura Holdings to overturn an order that requires them to pay $839 million for making false statements while selling mortgage-backed securities to Fannie Mae and Freddie Mac.

According to a Reuters report, the Supreme Court upheld a September ruling by the 2nd U.S. Circuit Court of Appeals that went against the banks, which had challenged the 2015 award on multiple grounds.

From the article:

The award stemmed from a lawsuit brought against Nomura and RBS by the Federal Housing Finance Agency in 2011. The FHFA has acted as conservator of mortgage agencies Fannie Mae and Freddie Mac since their 2008 takeover by the federal government after the collapse of the U.S. housing market.

The lawsuit was one of 18 brought by the FHFA that year over some $200 billion in mortgage-backed securities that banks sold Fannie Mae and Freddie Mac.

All the other lawsuits have been settled. The FHFA has recovered more than $23 billion from the settlements, including $5.5 billion from RBS in a different lawsuit, $5.83 billion from Bank of America and $4 billion from JPMorgan Chase Co.

As HousingWire’s Ben Lane previously reported, the Nomura and RBS case was the first to come to trial of the 18 lawsuits filed by the FHFA back in 2011. The lawsuits were an attempt to recover some of the losses on approximately $200 billion in mortgage bonds the GSEs bought in the run-up to the crisis.

The FHFA claimed that the companies allegedly lied about the quality of the underlying mortgages when selling them to Fannie and Freddie.

While Nomura and RBS fought back, some of the country’s biggest banks chose to settle with the federal government over toxic mortgage bonds, including Bank of America, which settled with the Department of Justice for $16.65 billion, JPMorgan Chase, which settled for $13 billion, and Citigroup, which settled for $7 billion.

Article source: https://www.housingwire.com/articles/43767-rbs-nomura-lose-final-appeal-must-pay-839m-over-mortgage-backed-securities

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