Citi Announces $1.13B Offer to Settle Securities Claims

Citigroup announced this week it has agreed to pay approximately $1.13 billion to settle repurchase claims on residential mortgage-backed securities (RMBS).

According to the bank’s announcement, Citi has agreed to make a binding offer to the trustees of 68 Citi-sponsored mortgage trusts that issued a combined $59.4 billion in RMBS from 2005–2008. The agreement, struck with 18 institutional investors representing the trusts, calls for a payment of $1.125 billion plus certain fees and expenses.

The bank has taken an additional charge of approximately $100 million in the first quarter as a result.

For making the payment, Citi would be released from outstanding and potential repurchase obligations on loans sold into the trusts. The agreement does not release the bank from potential investor claims related to alleged misrepresentations in loan offering documents or from any potential regulatory actions.

In a statement, the bank said, “This settlement resolves a significant legacy issue from the financial crisis and we are pleased to put it behind us."

The agreement still requires approval from the Federal Housing Finance Agency and acceptance by the trustees. In a separate release, the institutional investors that are party to the agreement—including Freddie Mac, Goldman Sachs, and others—urged the trustees to take Citi’s offer.