Citi Bank sign is seen, Wednesday, Dec. 5, 2012 in Chicago. Citigroup said Wednesday that it will cut 11,000 jobs, a bold early move by new CEO Michael Corbat. The cuts amount to about 4 percent of Citi's workforce of 262,000.
Kiichiro Sato, Associated Press - Ap
Citigroup agrees to pay $968M to Fannie Mae
- July 1, 2013 - 10:20 AM
NEW YORK — Citigroup 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 bank anticipates a $245 million residential mortgage reserve for its second quarter, consistent with reserves from recent quarters. Citigroup will report its quarterly results on July 15.
The New York company said it has adequate reserves for loans not covered by the agreement.
Citigroup Inc. said Monday that it will continue to work with Fannie Mae on buying back any mortgage loans sold to the government-controlled mortgage agency that don't meet its requirements.
Fannie Mae Executive Vice President and General Counsel Bradley Lerman said in a statement that the agency continues to work on resolving repurchase requests with other lenders.
Citigroup's stock added $1.05, or 2.2 percent, to $49.02 in morning trading. 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.
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