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Goldman Sachs, FHFA Agree to Multi-Billion Settlement in RMBS Suit

home-protectionNew York-based investment banking firm Goldman Sachs has agreed to pay $3.15 billion to settle a lawsuit filed by the Federal Housing Finance Agency (FHFA) alleging that Goldman Sachs sold faulty residential mortgage-backed securities (RMBS) to GSEs Fannie Mae and Freddie Mac, for which FHFA is conservator.

According to FHFA, under the terms of the settlement, Goldman Sachs will pay $2.15 billion to Freddie Mac and $1 billion to Fannie Mae to buy back the alleged faulty RMBS the two GSEs purchased between 2005 and 2007. FHFA estimates the worth of the settlement to be about $1.2 billion.

The lawsuit, FHFA v. Goldman Sachs & Co., et al., named Goldman Sachs, related companies, and some individuals as defendants, according to FHFA. The suit was settled in the U.S. District Court of the Southern District of New York.

“We are pleased to have resolved these matters," Gregory K. Palm, EVP and General Counsel of Goldman Sachs, said in a press release.

The settlement makes Fannie Mae and Freddie Mac whole on their investment in the RMBS in question, and as part of the settlement, the two GSEs will release certain claims they previously made against Goldman Sachs with regards to those same RMBS, according to FHFA.

A spokesperson for FHFA referred to the press release put out by the organization when asked for comment.

The settlement with Goldman Sachs was the 16th out of the 18 lawsuits FHFA has filed since 2011 with regards to RMBS.

About Author: Brian Honea

Brian Honea's writing and editing career spans nearly two decades across many forms of media. He served as sports editor for two suburban newspaper chains in the DFW area and has freelanced for such publications as the Yahoo! Contributor Network, Dallas Home Improvement magazine, and the Dallas Morning News. He has written four non-fiction sports books, the latest of which, The Life of Coach Chuck Curtis, was published by the TCU Press in December 2014. A lifelong Texan, Brian received his master's degree from Amberton University in Garland.

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