Citigroup, FHFA Settle ‘Bad’ Mortgage Suit
Citigroup has settled a lawsuit filed by the Federal Housing Finance Agency in which it alleged the bank misled Fannie Mae and Freddie Mac into buying $3.5 billion of 'bad' mortgage-backed securities, Reuters reported May 28.
The U.S. District Court in Manhattan disclosed the settlement but did not release terms of the deal. Several other related cases against Wall Street banks still are pending in Manhattan’s District Court, and an FHFA spokesperson said the agency still was discussing settlement options with those banks.
The Citigroup settlement is the second reached so far out of 18 securities fraud cases the FHFA filed against banks in 2011. The cases totaled more than $200 billion in MBS sold to Fannie and Freddie.
The other settlement involved General Electric Co. and included some $549 million in securities.