HSBC to pay $550M to end mortgage suit

A top housing regulator announced a $550 million settlement with HSBC on Friday over shoddy mortgage-backed securities purchased by Fannie Mae and Freddie Mac before the financial crisis.

The Federal Housing Finance Agency (FHFA), which oversees Fannie and Freddie, said that the agreement resolves claims made in 2011 that the British bank's U.S. mortgage arm falsely represented the quality of its mortgage-backed securities bought by the mortgage giants in 2005-2007.  

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HSBC will pay $374 million to Freddie and $176 million to Fannie.

"We are pleased to have resolved this matter," said Stuart Alderoty, general counsel for HSBC North America, in a statement.

The bank did not admit any wrongdoing and said that it is the 17th financial institution to reach a settlement with FHFA and was "not among those alleged to have committed fraud."

The bank ceased issuing residential mortgage-backed securities in 2007, according to a statement.

The agreement comes within weeks of a trial in New York where the British bank could have faced upward of $1.6 billion in damages, according to news reports.

The completion of the agreement leaves only two of the 18 lawsuits FHFA filed in 2011 outstanding.