Although additional defendants sued by the Federal Housing Finance Agency are expected to sooner or later cut deals to settle fraud charges over the sale of non-agency MBS to Fannie Mae and Freddie Mac, banks with larger exposures may calculate that their best bet is to let it play out in court, according to a new report by Fitch Ratings. Fitch noted that the FHFA’s announcement last month that UBS Americas will pay some $885 million to settle claims concerning MBS that UBS sold to the two government-sponsored enterprises is a significant event as other defendants crunch the numbers before deciding whether to proceed with a lengthy and expensive trial or to cut their losses. “Although not necessarily setting a formal precedent, the high settlement costs to UBS relative to the outstanding portfolio amount could lead...