Citigroup settles $3.5bn mortgage securities lawsuit
The mortgage-fraud lawsuits filed by the agency against other against Wall Street lenders are still pending.
Citigroup Inc has settled a lawsuit filed by Federal Housing Finance Agency (FHFA), which had charged the lender of misleading Fannie Mae and Freddie Mac into purchasing mortgage-backed securities worth $3.5bn.
In 2011, the FHFA had slapped a lawsuit against Citigroup and 17 other Wall Street lenders, accusing them of misrepresenting and mis-selling more than $200bn in securities to Federal National Mortgage Association (Fannie Mae) and Federal Home Loan Mortgage Corp (Freddie Mac).
The settlement with the FHFA was disclosed in a filing in US District Court in Manhattan. However, the terms of the deal have not been divulged.
The mortgage-fraud lawsuits filed by the agency against other against lenders are still pending.
So far, this settlement represents the second out of 18 fraud cases filed by the agency against the lenders in 2011.
The other banks that have been slapped lawsuits include Bank of America Corp, J.P. Morgan Chase & Co., UBS AG, and Barclays PLC.
Although several banks have been making efforts to settle the lawsuits, most of them have not been successful. In April 2013, a federal appeals court dismissed the arguments of UBS that the FHFA's claims should be disqualified as they were late in filing the complaint.
These lawsuits have been one of the most stringent actions taken by the federal regulatory agency.
Following the mortgage bust, the US Treasury had to chip in to rescue Fannie and Freddie, which were pumped with over $150bn in order to stay afloat.