Nearly two years after it was sued by the regulator of Fannie Mae and Freddie Mac, Citigroup Inc. has reached an agreement to settle the action.
The Federal Housing Finance Agency filed a federal lawsuit on behalf of Fannie and Freddie against the New York-based financial services giant in September 2011. Citi was just one of 17 defendants named in a host of lawsuits filed by the regulator.
Citi allegedly violated the Securities Act of 1933 when it misled the pair of secondary lenders about loan characteristics in the sale of $3.5 billion in residential mortgage-backed securities from September 2005 until May 2007.
Registration statements provided by Citi allegedly “contained misstatements and omissions of material facts concerning the quality of the underlying mortgage loans, the creditworthiness of the borrowers, and the practices used to originate such loans,” according to the complaint.
FHFA claimed that the misleading statements led to substantial losses at Washington, D.C.-based Fannie and McLean, Va.-based Freddie.
But the two sides have apparently come to an agreement.
A Stipulation and [Proposed] Order of Voluntary Dismissal With Prejudice was filed Tuesday in U.S. District Court for the Southern District of New York.
“Whereas plaintiff, Federal Housing Finance Agency, and defendants Citigroup Inc., Citigroup Mortgage Loan Trust Inc., Citigroup Global Markets Inc., Citigroup Global Markets Realty Corp., Susan Mills, Randall Costa, Scott Freidenrich, Richard A. Isenberg, Mark I. Tsesarsky, Peter Patricola, Jeffrey Perlowitz, and Evelyn Echevarria have reached a settlement disposing of all claims asserted in the above-captioned action,” the filing stated.
