First Tennessee Bank, the regional bank for First Horizon National (FHN), reached an agreement in principle with the United States Department of Housing and Urban Development and the United States Department of Justice to try and finally settle an issue that dates back to the mortgage business the company sold in 2008.
This is another major step for the company as it continues to unwind from its old mortgage business.
In the past several years, First Tennessee has resolved a number of other legal matters related to its former mortgage business and has sold substantial amounts of nonstrategic mortgage loans and mortgage servicing.
The claims are related to First Tennessee's underwriting and origination of FHA-insured mortgage loans from Jan. 1, 2006, through Dec. 31, 2008, which have gone to claim not later than Apr. 2, 2015.
Currently, the final legal resolution remains subject to negotiation. Under the agreement in principle First Tennessee has committed to make a cash payment of $212.5 million.
While First Horizon originally reserved $50 million for this matter, it expects to report a pre-tax expense of $162.5 million related to the agreement in principle in first quarter financial results.
