Citigroup agrees to pay $968M to Fannie Mae

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Associated Press

Posted on July 1, 2013 at 8:01 AM

Updated Monday, Jul 1 at 8:33 AM

NEW YORK (AP) — 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 good group of the loans were originated during the U.S. housing boom. Fannie Mae and others suffered once the housing crisis took hold, as defaults on mortgages climbed.

The agreement 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.

Citigroup's stock added 33 cents to $48.30 in premarket trading.

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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