Wells Fargo Unsettles Mortgage Bond Market by Holding Back Funds
- Trustee kept $90 million owed to investors in 20 securities
- Money held to cover legal costs related to financial crisis
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Wells Fargo & Co. surprised investors this week by withholding more than $90 million due to buyers of pre-crisis residential mortgage-backed securities.
The bank said it invoked its right as trustee to hold back funds to cover legal costs. The 20 transactions had a principal balance of $540 million and are among more than 2,000 deals involved in a lawsuit brought by bondholders including BlackRock Inc. and Pacific Investment Management Co. in 2014 to recover losses from the financial crisis.