Federal Housing Finance Agency reached a deal with Citigroup (C) for $3.5 billion in a mortgage-backed securities lawsuit.

The FHFA claimed that the bank misled Fannie Mae and Freddie Mac into buyinng faulty mortgage bonds.

The accord marks the second so far out of 18 securities fraud cases the FHFA filed against () in 2011 over more than $200 billion in mortgage-backed securities sold to Fannie and Freddie.