Citigroup paid $250 million to resolve U.S. mortgage suit

Thu Jan 2, 2014 12:59pm EST
 
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WASHINGTON (Reuters) - Citigroup Inc. (C.N: Quote) paid $250 million to taxpayer-owned Fannie Mae FNMA.OB and Freddie Mac FMCC.OB to settle a lawsuit over soured mortgage securities, the regulator of the two housing finance firms said on Thursday.

General Electric Co. (GE.N: Quote) also paid $6.25 million to settle a similar suit, the Federal Housing Finance Agency said in a statement. Ally Financial Inc, the former parent of bankrupt Residential Capital LLC, paid $475 million.

Citi, GE and Ally had previously settled the claims in 2013, but none had disclosed the financial terms.

The banks are among 18 financial institutions that were sued in 2011 for allegedly misleading Fannie Mae and Freddie Mac, the biggest provider of housing finance in the United States, into buying more than $200 billion in mortgage-backed securities.

Six institutions have since settled the accusations. GE and Citi were the first two to resolve the claims in early 2013, but the FHFA kept the terms confidential as they negotiated additional settlements.

In October, JPMorgan agreed to pay $4 billion to resolve its lawsuit, and in December, Deutsche Bank entered a $1.9 billion accord with the agency.

A seventh bank, Wells Fargo, which the FHFA never formally sued, also paid $335 million in November to resolve similar claims.

In total, the U.S. has recouped nearly $8 billion through the settlements, the housing regulator said. The lawsuits accused the firms of violating securities laws and in some cases, committing fraud.

The settlements came as the institutions suffered a series of disappointments in the litigation, failing to win dismissal of the lawsuits, among other setbacks.   Continued...

 
A Citi sign is seen at the Citigroup stall on the floor of the New York Stock Exchange, October 16, 2012. REUTERS/Brendan McDermid