The Federal Housing Finance Agency (FHFA) has settled the smallest securities fraud suit that remained of the 18 it had filed back in 2011, regarding mortgage-backed securities sold to Fannie Mae and Freddie Mac.

First Horizon National (NYSE: FHN) on Tuesday agreed to pay $110 million, which is about 12.5 percent of the face value of the securities involved. After this settlement, four suits remain in full.

The largest is against Royal Bank of Scotland (NYSE: GS), which involves about $11 billion in mortgage-backed securities. Third is HSBC at $6.2 billion in securities. Fourth is Nomura Holdings at $2 billion.

Related: Goldman Sachs and Others Still Face FHFA Suits

What can investors learn about these remaining suits from the First Horizon settlement? The claims are all similar, although the facts differ. Still, past settlements' percentage discount off the securities face value is a strong suggestion about future settlements.

Previous Settlements

Some of the other suits FHFA filed settled for similar percentages to First Horizon: JPM Chase (NYSE: MS) for 11.8 percent. Deutsche Bank (NYSE: DB) was slightly higher at 13.6 percent.

Some settlements, including the settlement announced on April 24th with Barclays, were for significantly less. Barclays settled for $280 million, a bit less than six percent of the total $4.9 billion of securities in the suit.

Three others settled for less than 10 percent of the face value of the securities: Credit Suisse at 6.3 percent, Citigroup at 7.1 percent, and Societe General at 9.4 percent.

Bank of America's situation is unique. While it paid $9.5 billion to resolve all claims relating to its own securities, those from Countrywide and those from Merrill Lynch, that $9.5 billion includes $3.2 billion that repurchased securities at their current face value. As a result, the cost of the settlement to Bank of America unclear -- is it $6.3 billion, or $9.5? Will it actually get $3.2 billion in value from the securities it purchased, more or less?

From FHFA's perspective, it got 16.5 percent of the sued-over securities value; from Bank of America's, it's possible it only paid 11.0 percent.

The FHFA's settlement with UBS seems shockingly high in comparison to these others, at 19.7 percent of the securities' face value.

Applying the Math to the Pending Cases

If each of these settled for 12 percent, as did First Horizon, then RBS would owe $3.6 billion; Goldman $1.3 billion; and HSBC $744 million. If they settled for a Barclays-like 6 percent, those numbers would be cut in half.

Of course, some settlements involved other law enforcers as well, like JPM Chase's. If any of these three involve other regulators then the settlement total would be even higher.

One striking feature of the settlement agreements made public--they haven't all been--is that they exclude claims based on LIBOR manipulation. Excluding such claims allows FHFA to bring such suits going forward. Will it?

If the FHFA brings a new round of suits alleging LIBOR harms, the banks' mortgage woes are not over.

Using Private Lawyers Makes A Big Difference

The FHFA settlements have been much higher value, like 10-to-1, than cases brought by the Department of Justice and Securities and Exchange Commission, Columbia Law School professor John C. Coffee tells Benzinga, because the FHFA used private counsel on a type of contingency fee basis to bring the case.

When bringing such complex cases with the intention of being able to try them, "You need 40 or more lawyers assigned to the case," Coffee explained. "You need to do hundreds of depositions. Public enforcement agencies just cannot throw that manpower at it."

What the SEC and others generally do, Coffee said, was tell companies they intend to bring charges -- and then immediately initiate settlement negotiations. By bringing private counsel, the government gets the capacity to really take the cases forward, which results in bigger settlements.

Coffee noted the FHFA wasn't the only government agency to use private counsel this way. Private counsel hired by the FDIC won a $168 million verdict against three IndyMac executives. And the FDIC's private counsel won a $12 million settlement with IndyMac's former CEO, Michael Perry, who resolved the SEC's similar claims for a mere $80 thousand.

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