Citigroup, FHFA Settle Mortgage Lawsuit

Citigroup has agreed to settle a lawsuit by the federal government that charged the bank with misleading investors in the run-up to the mortgage meltdown.

The pact between the nation's third-biggest bank by assets and the Federal Housing Finance Agency disposes of claims by FHFA that Citigroup sold more than $3.5 billion in securities backed by defective residential mortgages to Fannie Mae and Freddie Mac over a 20-month period starting in September 2005, according to a filing Tuesday by the bank and FHFA with the U.S. District Court in Manhattan.

Financial terms of the settlement, which was first reported by Reuters, were not disclosed.

"We are pleased to put this matter behind us," Citigroup spokeswoman Danielle Romero-Apsilos said in an emailed statement.

FHFA, in its role as conservator for Fannie and Freddie, sued Citigroup and 17 other financial institutions in 2011. FHFA charged Citigroup with misstating facts about the quality of the underlying mortgage loans and the practices used to originate them.

In January, FHFA settled similar claims against General Electric (GE).

Stefanie Johnson, a spokeswoman for FHFA, said in a statement that the agency "remains active in settlement discussions with other parties that were subjects of these lawsuits."

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