(Adds details from FHFA statement)
By Nate Raymond
NEW YORK, Sept 12 (Reuters) - HSBC Holdings Plc will pay $550 million to resolve a U.S. regulator's claims thatthe British bank made false representations in selling mortgagebonds to Fannie Mae and Freddie Mac beforethe financial crisis.
The settlement announced Friday between the bank's U.S. unitand the Federal Housing Finance Agency, the conservator for thetwo government-controlled mortgage finance companies, came lessthan three weeks before a Sept. 29 trial in New York, where HSBChas said it could have faced up to $1.6 billion in damages.
The deal is the latest arising from 18 lawsuits that theFHFA filed in 2011 to recoup losses on $200 billion inmortgage-backed securities sold to Fannie Mae and Freddie Mac,which the U.S. government took into conservatorship amid the2008 economic crisis.
The lawsuit accused HSBC of falsely representing to FannieMae and Freddie Mac that loans underlying $6.2 billion ofmortgage-backed securities sold from 2005 to 2007 metunderwriting guidelines and standards.
HSBC has denied the allegations, and did not admitwrongdoing as part of the settlement. The bank stopped issuingresidential mortgage-backed securities in 2007.
"We are pleased to have resolved this matter," StuartAlderoty, general counsel for HSBC North America, said in astatement.
Under the settlement, HSBC will pay $374 million to FreddieMac and $176 million to Fannie Mae, the FHFA said.
Along with settlements with other banks including Bank ofAmerica Corp, Deutsche Bank AG and MorganStanley, the FHFA has so far recovered nearly $17.9billion. Last month, Goldman Sachs Group Inc agreed to asettlement that the FHFA valued at $1.2 billion.
Lawsuits remain pending against Nomura Holdings Inc and Royal Bank of Scotland Group Plc. The FHFA said it"remains committed to satisfactory resolution of these actions."
Many of the banks settled after U.S. District Judge DeniseCote, who has overseen most of the FHFA litigation, issued several rulings making it harder to mount defenses.
The deal with HSBC came after it last month lost a bid todismiss the case as untimely, in light of a recent U.S. SupremeCourt ruling.
The case is Federal Housing Finance Agency v. HSBC NorthAmerica Holdings Inc, U.S. District Court, Southern District ofNew York, No. 11-06189. (Reporting by Nate Raymond in New York; Editing by MeredithMazzilli and David Gregorio)
HSBC Holdings (HSBA)
