The settlement covers 3.7 million home loans made between 2000 and 2012. Not only will it apply to existing troubled mortgages but also to any future claims on those loans. Most of the settlement money is available under Citigroup's existing mortgage repurchase reserves. The bank said it would rebuild its residential mortgage repurchase reserve to $245 million in the second quarter.
"We have a strong and productive relationship with Fannie Mae," said CitiMortgage CEO Jane Fraser in the company's statement. "This agreement resolves substantially all potential future repurchase claims from them for loan originations from 2000 to 2012."
In a statement, Fannie Mae General Counsel Bradley Lerman said, "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 ..."
Last January, Bank of America agreed to pay Fannie Mae $3.6 billion in cash and repurchase $6.75 billion worth of residential mortgages it sold to Fannie Mae from 2000 to 2008.