Home Business Credit Suisse agrees to pay $885 million to settle US mortgage case

Credit Suisse agrees to pay $885 million to settle US mortgage case

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Credit Suisse has agreed to pay $885 million to settle claims it mis-sold mortgage-backed securities in the US before the financial crisis.

The Swiss bank was accused of misleading US government-backed mortgage giants, Fannie Mae and Freddie Mac, over the quality of the products.

Fannie Mae and Freddie Mac, which received government bailouts in 2008, will be paid $234 million and $651 million respectively.

More than $10.1 billion has been recovered from banks in similar actions.

Credit Suisse has agreed to pay $885 million to settle claims it mis-sold mortgage-backed securities in the US before the financial crisis

Credit Suisse has agreed to pay $885 million to settle claims it mis-sold mortgage-backed securities in the US before the financial crisis (photo Reuters)

The Credit Suisse settlement is the ninth that the Federal Housing Finance Agency (FHFA) has reached over some $200 billion in mortgage-backed securities – an investment product at the centre of the global financial crisis.

Since 2011 the FHFA, which oversees Fannie Mae and Freddie Mac, has filed 18 lawsuits against banks over the products.

Credit Suisse said the settlement resolved its biggest remaining mortgage-related lawsuit.

The settlement covered $16.6 billion of securities sold to the two mortgage companies between 2005 and 2007.

Credit Suisse said it would reduce previously reported 2013 annual earnings by 275 million Swiss francs ($311 million) as a result of the settlement.