Citigroup agrees to pay $1.1 billion in mortgage settlement
Citigroup Monday said it reached an agreement with a group of 18 institutional investors to pay $1.125 billion to settle claims on some mortgage-backed securities sold ahead of the financial crisis.
Citi said the agreement releases it from an obligation to repurchase mortgages sold into 68 mortgage trusts. The 68 trusts issued $59.4 billion in residential mortgage securities during 2005-2008.
Leading banks have been settling a huge number of suits tied to the sale of mortgage-backed securities before the housing market tanked in 2007 and 2008. Many of the disputes concern securities linked to low-quality, sub-prime mortgages.
“This settlement resolves a significant legacy issue from the financial crisis and we are pleased to put it behind us,” Citi said in a statement.
The 18 institutional investors were represented by Houston law firm Gibbs & Bruns, which announced similar settlements previously with JPMorgan Chase and Bank of America.
The group of institutional investors includes affiliates of BlackRock and Goldman Sachs, among others, Gibbs & Bruns said in a statement.
The settlement must be approved by the Federal Housing Finance Agency and trustees of the 68 trusts.
Citi said the agreement will result in a $100 million charge in the first quarter.
[Image via Agence France-Presse]