""Citigroup"":https://online.citibank.com/US/Welcome.c#_tab2 and ""Fannie Mae"":http://www.fanniemae.com/portal/index.html announced Monday an agreement to resolve future repurchase claims for breaches of representations of warranties on millions of loans originated between 2000 and 2012.[IMAGE]
According to release from Citi, the agreement covers 3.7 million residential first mortgage loans sold to Fannie Mae. Citi is not released from liability regarding servicing or other ongoing contractual obligations on those loans; the bank is also still responsible for a population of less than 12,000 loans originated in the same time frame with certain characteristics such as those sold with a performance guaranty or under special credit enhancement programs.
As part of the agreement, Citi will pay Fannie Mae $968 million, ""substantially all of which was covered"" by the bank's existing mortgage repurchase reserves as of the end of the first quarter. Citi estimates it will record a residential mortgage repurchase reserve build of $245 million in its next quarterly earnings report and believes ""it is adequately reserved for the loans not covered by the agreement.""
""We have a strong and productive relationship with Fannie Mae. ... 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,"" said CitiMortgage CEO Jane Fraser.
Citi also said in its release it will continue to work with Fannie Mae on the timely repurchase of any mortgages sold to the GSE that do not meet its requirements.
""This resolution is an example of our desire to work together with our business partners to find common ground. 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,"" said Bradley Lerman, EVP and general counsel at Fannie Mae. ""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.""