Citigroup Inc. agreed to pay nearly $1 billion to Fannie Mae to cover Citi’s liability for potential flaws in 3.7 million mortgages it sold to the housing-finance giant from 2000 through 2012.
Fannie Mae, the biggest buyer and guarantor of home loans, had previously announced similar but far bigger settlements with Bank of America — $1.52 billion in January 2011 and a whopping $10.35 billion this past January. The Citi settlement is for $968 million.
The Citigroup settlement, announced Monday, puts to rest nearly all the repurchase demands made against Citi by Fannie Mae, which was rescued from failing during the financial crisis by a taxpayer bailout.
Citigroup said in a statement that most of the funds for the settlement would come from reserves already set aside for claims over soured loans. It also said it has adequate reserves to cover its liability for an additional 12,000 mortgages not covered by the settlement.
Jane Fraser, the chief executive of CitiMortgage, said the bank’s relationship with Fannie Mae is “strong and productive” despite the disputes over troubled loans.
Citigroup shares are trading near its 52 week high of at $53.56.
It appears that Citi has bounced back from the taxpayer bailout just a few years ago? What are your thoughts?
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