Citigroup agreed to pay Fannie Mae $968 million to settle potential future repurchase claims for breaches of representation and warranties Monday, according to the banking giant.
The settlement between Citigroup and Fannie Mae resolves reps and warrants breaches on 3.7 million first residential mortgages sold to the government-sponsored enterprise between 2000 and 2012.
“We have a strong and productive relationship with Fannie Mae,” said CEO of CitiMortgage (C) Jane Fraser.
She added, “This agreement resolves substantially all potential future repurchase claims from them for loan originations from 2000 to 2012. As we work to deepen and enhance financial relationships with our clients, we will continue to focus on the production of high-quality mortgage loans.”
Citigroup’s agreement with Fannie Mae covers future originated-related reps and warrants claims on the covered loans.
However, the settlement does not release Citgroup from liability with respect to its servicing or other ongoing obligations on the covered loans.
Particularly, it does not release liability to a population of less than 12,000 loans originated between 2000 and 2012 with specific characteristics such as loans sold with a performance guaranty or under special credit enhancement programs, Citigroup explained in a statement.
“This resolution is an example of our desire to work together with our business partners to find common ground,” said executive vice president of general counsel at Fannie Mae Bradley Lerman.
He added, “Today’s agreement resolves legacy repurchase issues, compensates taxpayers for losses, and allows Fannie Mae and Citi to move forward and strengthen our business relationship. We continue to focus on making strong progress in resolving repurchase requests with other lenders, and remain committed to helping people to buy, refinance or rent a home.”
Citigroup firm believes it is adequately reserved for loans not covered by the agreement and will continue to work with the GSE on the timely repurchase of any mortgagees sold to Fannie Mae that do not meet the enterprise’s requirements, the mega bank concluded.