Citigroup OKs $968M payment to Fannie over mortgage loans
Citigroup Monday said it has agreed to pay $968 million to Fannie Mae to resolve potential future repurchase claims on residential mortgage loans originated between 2000 and 2012.
A sizable group of the loans were originated during the U.S. housing boom. Mortgage giants Fannie Mae and Freddie Mac bought mortgage loans from banks like Citigroup in the run-up to the financial crisis. Fannie and Freddie teetered as the loans went bad, and they were effectively nationalized in 2008. The government has spent billions to keep Fannie and Freddie afloat.
Fannie and Freddie have since said that the banks misled them by not telling them the true condition of the mortgages they were buying. For several years, they have been demanding that the banks repurchase the mortgages.
The agreement between Citigroup and Fannie Mae covers claims for breaches of representations and warranties on 3.7 million loans. The deal doesn't release Citigroup's liability for servicing and other ongoing contractual obligations for the loans.
Citigroup said that it is also still liable for a group of less than 12,000 loans originated between 2000 and 2012, including loans sold with a performance guaranty or under special credit enhancement programs.
The New York company said it has adequate reserves for loans not covered by the agreement.
Citigroup's stock rose 28 cents to $48.25 in trading Monday. The shares have traded in a 52-week range of $24.91 to $53.56.
In January, Bank of America reached an $11.6 billion settlement with Fannie Mae to settle claims resulting from mortgage-backed investments that soured during the housing crash.