Citigroup will pay the mortgage finance giant
Fannie Mae nearly 1 billion dollars to compensate the taxpayer-backed
company for troubled home loans, the company said Monday.
New York-based Citigroup, the third-largest US bank by assets, will transfer 968 million dollars for current troubled loans and to resolve any future claims on 3.7 million mortgage loans that might sour, Citigroup said in a statement. Those loans were made between 2000 and 2012 and were purchased by Fannie Mae.
The payments from Citigroup are covered by existing reserves, the company said, but it will add 245 million dollars to its reserves in the second quarter.
Citigroup and other large US banks, including Bank of America have been pressed to buy back troubled mortgages as Fannie Mae and the other US taxpayer-backed mortgage finance giant, Freddie Mac, seek cash to repay a government bailout they received after the 2008 financial crisis.
Fannie Mae and Freddy Mac rank among the biggest buyers of home loans. They typically promise refunds if the mortgages lack accurate data about borrowers and the property itself.
Citigroup and other banks sold off millions in mortgages to the government entities, which repackaged them into mortgage-backed securities. In many cases borrowers defaulted, causing huge losses for Fannie Mae and Freddy Mac.
Bank of America, the second-largest US lender by assets, agreed in January to pay Fannie Mae a total of 11.7 billion dollars to compensate for faulty mortgages and to buy back mortgages that could have resulted in future losses for the government.
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