UPDATE 1-First Horizon to pay $110 mln to settle U.S. agency's mortgage claims

(Adds further details on settlement, background on litigation)

By Nate Raymond

NEW YORK, April 29 (Reuters) - First Horizon National Corp will pay $110 million to resolve claims it misled FannieMae and Freddie Mac into buyingmortgage-backed securities that later went sour, a U.S.regulator said on Tuesday.

The settlement resolves a lawsuit filed in New York federalcourt by the Federal Housing Finance Agency, the conservatorsince 2008 for the government-controlled mortgage companies.

The deal marked the 12th settlement the FHFA has reached inlitigation the agency began in 2011 in a number of lawsuits overabout $200 billion in mortgage-backed securities, an investmentproduct at the center of the 2008 financial crisis.

As part of the deal, First Horizon will pay $61.6 million toFannie Mae and $48.4 million to Freddie Mac, the FHFA said.

First Horizon Chief Executive Bryan Jordan said in astatement that the settlement was "another big step forward" inthe Memphis, Tennessee-based bank's efforts to unwind from itsformer mortgage businesses.

First Horizon said it does not expect the accord tomaterially impact earnings for the second quarter of 2014. Thebank said it had already established a reserve for the case andhad insurance available to cover part of the deal.

The FHFA's lawsuit accused First Horizon of misleadingFannie Mae and Freddie Mac into buying $883 million in faultymortgage-backed securities from September 2005 to April 2007.

To date, the FHFA has recovered more than $16 billion indirect connection with the lawsuits over similar securities,according to the agency.

The deal with First Horizon followed a similar $280 millionsettlement between the FHFA and Barclays Plc announcedon Thursday.

Other banks to reach settlements include Bank of AmericaCorp, JPMorgan Chase & Co, Deutsche Bank AG and Morgan Stanley.

Only four defendants remain, including Goldman Sachs GroupInc, Nomura Holdings Inc, Royal Bank of ScotlandGroup, and HSBC Holdings Plc.

The case is Federal Housing Finance Agency v. First HorizonNational Corporation, U.S. District Court, Southern District ofNew York, No. 11-06193. (Reporting by Nate Raymond; Editing by Grant McCool and KenWills)