After alleged misrepresentation of bad securities sold to Fannie Mae and
Freddie Mac, Morgan Stanley announced a $1.25 billion agreement in
principle with the Federal Housing Finance Agency (FHFA), according to
an SEC filing.
In connection with the settlement, the company announced it is
recording a $150 million addition to its fourth-quarter legal reserves.
Last year, the agency reported that they were able to recover
approximately $8 billion in settlements from seven other banks looking
to clear their name. The banks were accused of “material omissions” in
mortgage-backed security sales, which added up to tremendous losses
for Fannie and Freddie.
The agreement remains subject to final approvals by both parties.