) announced a settlement with
) worth about $395 million. The settlement includes the
resolution of all outstanding and potential repurchase claims
relating to misrepresentations of loans originated and sold
directly to Freddie Mac by Citigroup from 2000 to 2012.
The settlement amount will be paid from Citigroup's current
reserves. In the lawsuit, Freddie Mac accused the banking major
of misrepresenting risky mortgage-backed securities (MBS) worth
about $3.7 million.
Prior to this settlement, in Jul 2013, Citigroup announced the
settlement of a lawsuit filed by
) related to the similar issue. The company shelled out a sum of
$968 million to Fannie Mae for the settlement.
In May this year, Citigroup also settled a lawsuit filed by the
Federal Housing Finance Agency (FHFA), accusing it of
misrepresenting MBS. FHFA had accused Citigroup of deceiving
Fannie Mae and Freddie Mac into buying MBS worth $3.5 billion.
Such moves by Citigroup demonstrate the company's aim to resolve
all mortgage related issues, thereby reducing costs over the
upcoming period. Moreover, such settlements are anticipated to
aid in the further revival of the economy. Alongside, these
strategic decisions are expected to bode well for Citigroup and
help it gain investors' confidence. Citigroup currently carries a
Zacks Rank #4 (Sell)
Citigroup is the second bank after
Bank of America Corporation
) to arrive at a settlement. BofA announced an agreement with
Fannie Mae worth about $10.3 billion in Jan 2013. It included the
resolution of all outstanding and potential repurchase, along
with other claims relating to all major residential mortgage
loans originated and sold directly to Fannie Mae by BofA from Jan
1, 2000 through Dec 31, 2008.
BANK OF AMER CP (BAC): Free Stock Analysis
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