Citigroup Inc., the third-largest U.S. bank by assets, will pay Fannie Mae $968 million to compensate the taxpayer-backed mortgage buyer for more than a decade of claims tied to faulty home loans.
The agreement includes 3.7 million mortgages originated from 2000 to 2012 and sold to Fannie Mae, New York-based Citigroup said today in a statement. While payments are covered by existing reserves, the company set aside an additional $245 million in the second quarter.
Banks including Citigroup and Bank of America Corp. have been pressed to buy back flawed mortgages as Fannie Mae and Freddie Mac seek cash to repay the $187.5 billion bailout they received after the 2008 financial crisis. The two U.S.-owned firms rank among the biggest buyers of home loans, and banks typically promise refunds if the mortgages lack accurate data about borrowers and properties.