Goldman Sachs In Discussions To Settle FHFA Mortgage Suit: Bloomberg

(RTTNews) - Investment bank Goldman Sachs Group Inc. (GS) is in talks to settle claims by the Federal Housing Finance Agency that the company sold faulty mortgage-backed securities to mortgage giants Fannie Mae and Freddie Mac, Bloomberg reported. The lender is likely pay $800 million to $1.25 billion to settle the issue.

Earlier this year, Morgan Stanley (MS) reached a $1.25 billion agreement in principle to resolve its mortgage-backed securities litigation with the Federal Housing Finance Agency as conservator for Freddie Mac and Fannie Mae.

The Federal Housing Finance Agency sued 18 banks in 2011 and seven banks agreed to pay a total of nearly $8 billion last year to settle claims that they made misrepresentations about mortgages underlying securities bought by the two mortgage giants in the lead-up to the credit crisis.

In 2010, Goldman Sachs agreed to a $550 million payment to settle a Securities and Exchange Commission suit over the marketing of a synthetic collateralized debt obligation called Abacus 2007-AC1.

GS closed down 0.5 percent on Friday at $ 175.40.