First Horizon to Pay $110 Million to FHFA
First Horizon National Corp. is getting closer to putting its mortgage woes behind it.
The Memphis company announced late Tuesday that it will pay $110 million to the Federal Housing Finance Agency to settle allegations that it sold faulty mortgages to Fannie Mae and Freddie Mac in the years leading up to housing bust. As a result of the settlement, a lawsuit that FHFA, which oversees Fannie and Freddie, filed against First Horizon and affiliated parties in 2011 will be dismissed.
In a news release, First Horizon called the settlement "another big step forward" in the bank's ongoing effort to wind down its former mortgage lending operation, which it sold to MetLife in 2008. (MetLife has since disbanded the unit.)
The company added that it had put funds aside for an anticipated settlement and therefore does not expect the settlement costs to "materially" impact its second-quarter earnings.
First Horizon could still be facing fines from the Department of Housing and Urban Development, however. It disclosed last year that it has been subject to a government probe relating to mortgages insured by the Federal Housing Administration, which HUD oversees. As with the Fannie and Freddie loans, the FHA loans were all originated prior to 2008.