Citigroup Inc. has agreed to pay more than $1 billion to settle repurchase claims on non-agency securities.
The New York-based company disclosed Monday that it reached an agreement with 18 institutional investors to settle repurchase claims.
At issue are representation and warranty claims on 68 mortgage securitization trusts for $59.4 billion that were sponsored by Citi.
Citi said in a written statement that the residential mortgage-backed securities covered in the agreement represent all of the trusts established by its legacy securities and banking business from 2005 to 2008 where it made representations and warranties.
“The agreement, if accepted by the trustees, would release Citi’s obligation to repurchase mortgage loans sold into the trusts, or make the trusts whole, for outstanding or potential claims for breaches of representations and warranties on the loans,” the statement said.
Citi would be on the hook, however, for misrepresentations in the offering documents. Also excluded are loans sold through private securitization trusts through CitiMortgage Inc.
Citi has agreed to make a binding offer of $1.125 billion to RMBS trustees.
Citi said it will take a $100 million first-quarter charge tied to the settlement.
“This settlement resolves a significant legacy issue from the financial crisis and we are pleased to put it behind us,” Citi said.
In addition to trustee approval, the trustees could require court approval.
Institutional investors were represented by Gibbs & Bruns LLP.
