Wells Fargo to pay $591M to settle bad mortgages

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WASHINGTON — Wells Fargo & Co. said Monday it agreed to pay $591 million to Fannie Mae to settle disputes over soured mortgages that the bank sold to the seized housing finance giant during the subprime housing boom.

The agreement covers loans originated by Wells Fargo before 2009 that Fannie Mae was trying to force the bank to buy back. The deal "resolves substantially" all repurchase issues related to those loans, the company said.

Wells Fargo will pay $541 million in cash to Fannie Mae, with the rest covered by credits from earlier repurchases.

Fannie Mae and its sibling firm, Freddie Mac, were seized by the federal government in 2008 as they teetered near bankruptcy because of bad loans they had purchased from banks.