Citigroup has paid $250 million to Fannie Mae and Freddie Mac to settle claims over shoddy mortgage-backed securities
Citigroup has paid $250 million to Fannie Mae and Freddie Mac to settle claims over shoddy mortgage-backed securities, according to a Reuters report.
Citigroup was one of 18 financial institutions sued in 2011 by the Federal Housing Finance Agency, which oversees Fannie and Freddie. The FHFA alleged that the banks misled Fannie and Freddie into buying more than $200bn in faulty mortgage-backed securities.
Citigroup settled the claim early in 2013, but the terms of the settlement were kept confidential as additional negotiations were conducted, according to Reuters.
The settlement, along with similar deals from several other financial institutions, should be reflected in earnings statements from Fannie and Freddie sometime this year. If the cash infusions from the settlements wind up boosting the mortgage giants’ earnings, any profits will go into the Treasury as dividend payments, according to Reuters.
Fannie and Freddie were taken into government conservatorship in 2008 after nearly collapsing during the financial crisis. The companies took more than $187bn from the government to stay solvent; they have paid back more than $185bn so far.
Citigroup was one of 18 financial institutions sued in 2011 by the Federal Housing Finance Agency, which oversees Fannie and Freddie. The FHFA alleged that the banks misled Fannie and Freddie into buying more than $200bn in faulty mortgage-backed securities.
Citigroup settled the claim early in 2013, but the terms of the settlement were kept confidential as additional negotiations were conducted, according to Reuters.
The settlement, along with similar deals from several other financial institutions, should be reflected in earnings statements from Fannie and Freddie sometime this year. If the cash infusions from the settlements wind up boosting the mortgage giants’ earnings, any profits will go into the Treasury as dividend payments, according to Reuters.
Fannie and Freddie were taken into government conservatorship in 2008 after nearly collapsing during the financial crisis. The companies took more than $187bn from the government to stay solvent; they have paid back more than $185bn so far.
