Nomura, RBS ordered to pay a further $33m in US mortgage bond case
Nomura&nbsp;and the Royal Bank of Scotland are to pay a further $33m, on top of $806m they have already been ordered to pay by the Federal Housing Finance Agency (FHFA), over allegations that they made false statements in selling mortgage-backed securities regarding mortgage companies Fannie Mae and Freddie Mac. This case is the first to reach trial of the 18 lawsuits that FHFA have filed since 2011 over the $200bn of mortgage-backed securities that banks sold to the two mortgage giants.
Royal Bank of Scotland Group (LON:RBS) and Nomura have agreed to pay an additional $33 million (£21.8 million) on top of $806 million (£514 million) for making false statements in selling mortgage-backed securities in the run-up to the financial crisis. The agreement is related to legal costs incurred by the Federal Housing Finance Agency (FHFA).



RBS’ share price lost ground on Friday, falling 3.56 percent to close at 322.50p, slightly underperforming the benchmark FTSE 100 index. The shares have shed some nine percent of their value over the past year.

Reuters on Saturday quoted court papers filed in Manhattan federal court on Friday as showing that RBS and Nomura had agreed to pay up to $33 million to cover the legal costs which the FHFA incurred taking the banks to trial earlier this year. The regulator had sued the banks in its role as conservator for mortgage giants Fannie Mae and Freddie Mac which bought $2 billion in mortgage-backed securities from the two lenders in the run-up to the 2008 financial crisis.



Earlier this year, the US District Court for the Southern District of New York fined RBS and Nomura a collective $806 million, having ruled that both banks had made false statements when they sold mortgage-backed securities to Fannie Mae and Freddie Mac. RBS was an underwriter on some of the securities in the case.

Reuters notes that under the agreement with the FHFA, Nomura and RBS will pay $33 million if after an appeal they pay at least $413 million for state law violations asserted by the regulator. Should that amount shrink to above $272 million, the parties will let US District Judge Denise Cote decide how much up to $33 million should be paid. Any amount smaller than $272 million would void the agreement.

As of 07:46 BST, Monday, 07 September, Royal Bank of Scotland Group share price is 322.50p.

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