Citigroup agreed to pay Fannie Mae $968 million under a recently signed agreement to resolve any potential repurchase claims for warranty and representation breaches related to 3.7 million residential mortgages sold to the mortgage giant.
The agreement covers any potential future origination-related representation and warranty claims on loans originated by Citi between 2000 and 2012, though it does not absolve Citi of liabilities related to servicing or ongoing obligations on the loans.
Additionally, the agreement does not absolve Citi of liability on a population of less than 12,000 loans with certain characteristics, including loans sold with a performance guaranty or special credit enhancement programs. Citi’s existing mortgage repurchase reserves covered the payment to Fannie.
“We have a strong and productive relationship with Fannie Mae,” CitiMortgage CEO Jane Fraser said. “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.”
Citi plans to release its second quarter financial results on July 15 and estimates it will record a residential repurchase reserve of $245 million—a number consistent with past repurchase reserve additions.