M&T Bank Corporation MTB is in discussions with the U.S. authorities to resolve investigation over its mortgage lending operations.
According to the New York-based bank’s latest quarterly filing, several government agencies are conducting investigations relating to the bank’s origination of Federal Housing Administration (“FHA”) insured loans and mortgages sold to Freddie Mac FMCC and Fannie Mae FNMA.
The U.S. Department of Housing and Urban Development Office of Inspector General and the U.S. Department of Justice are probing to determine whether M&T Bank complied with underwriting guidelines related to the FHA loans and mortgages.
According to the review of the government, some of the FHA loans do not conform to the underwriting guidelines. However, the bank “based on its own review of the sample, does not agree with the sampling methodology and loan analysis employed by the government.”
M&T Bank mentioned that it is extending co-operation to the authorities in the investigation and has initiated settlement talks. The bank also noted that remedies in the settlements may include restitution, fines and penalties.
While the latest investigation adds to M&T Bank’s string of litigations and probe, any possible settlement is likely to bring relief to the bank.
M&T Bank currently carries a Zacks Rank #3 (Hold). Citigroup Inc. C is a better-ranked stock in the major regional banks space with a Zacks Rank #2 (Buy).
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