For the second time in three months, Citigroup Inc. has reached a settlement to resolve repurchase liabilities — though the latest agreement is for less than half of the earlier settlement.
In early July, the New York-based financial services conglomerate disclosed that a $968 million agreement was reached with Fannie Mae.
That deal resolved potential future repurchase claims for breaches of representations and warranties on 3.7 million residential first mortgages acquired by Fannie between 2000 and 2012.
The latest settlement is with Freddie Mac.
Citi said on Wednesday that it will pay $395 million to resolve potential future repurchase claims for breaches of representations and warranties on 3.7 million loans sold to Freddie between 2000 and 2012.
All of the settlement expense will be charged to existing repurchase reserves as of June 30.
“Today’s agreement with Freddie Mac marks another important milestone in successfully resolving Citi’s remaining legacy mortgage issues,” CitiMortgage Inc. Chief Executive Officer Jane Fraser said in the statement. “Looking forward, Citi remains focused on continuing to provide high quality mortgage products and service to our customer.”
However, Citi is still liable for servicing and other ongoing contractual obligations on the loans included in today’s settlement.
Citi will also remain liable on a pool of fewer than a thousand loans originated between 2000 and 2012 that have certain characteristics such as loans sold with recourse or some guarantee of performance and loans currently in the repurchase process. But Citi said it believes that it has enough in existing reserves to cover these loans.
Citi said it will continue to work with Freddie on the timely repurchase of any loans it sold to Freddie that don’t meet the secondary lender’s requirements.
