Credit Suisse to pay $885 million in FHFA mortgage fraud case

NEW YORK/ZURICH (Reuters) - Credit Suisse Group AG agreed to pay $885 million to resolve claims by a U.S. regulator that the Swiss bank misled Fannie Mae and Freddie Mac into buying mortgage-backed securities that later went sour.

The settlement announced on Friday would resolve claims in two lawsuits filed in New York by the Federal Housing Finance Agency (FHFA), the conservator since 2008 for the government-controlled mortgage companies.

It is the ninth settlement that the FHFA has reached in litigation that began in 2011, when it filed 18 lawsuits over some $200 billion in mortgage-backed securities, an investment product at the center of the recent global financial crisis.

The accord resolves claims against Credit Suisse over $16.6 billion of securities sold to Fannie and Freddie, and ends what the Swiss bank called the largest mortgage-related investor lawsuit it still faced.

Credit Suisse will pay $234 million to Fannie Mae and $651 million to Freddie Mac, the FHFA said.

So far, the FHFA has recovered more than $10.1 billion from banks over similar securities.

This includes nearly $9.8 billion in settlements of litigation with such banks as JPMorgan Chase & Co , Citigroup Inc , Deutsche Bank AG , Morgan Stanley and Societe Generale .

The FHFA also reached a separate $335.2 million accord with Wells Fargo & Co , which it did not formally sue.

Several of the settlements were reached after a series of series of court rulings that went against the banks.

Credit Suisse said on Friday it will reduce previously reported fourth-quarter and 2013 results by 275 million Swiss francs ($311.17 million) after taxes for the settlement, resulting in a fourth-quarter net loss of 8 million Swiss francs.

The case is Federal Housing Finance Agency v. Credit Suisse Holdings (USA) Inc. et al, U.S. District Court, Southern District of New York, No. 11-06200.

(Reporting by Nate Raymond and Silke Koltrowitz; Editing by Elaine Hardcastle and Stephen Powell)

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