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 General Electric Co. <GE.N> also paid $6.25 million to settle a
similar suit, the Federal Housing Finance Agency said in a
statement. Ally Financial Inc, the former parent of bankrupt
Residential Capital LLC, paid $475 million.
Citi, GE and Ally had previously settled the claims in 2013, but
none had disclosed the financial terms.
The banks are among 18 financial institutions that were sued in 2011
for allegedly misleading Fannie Mae and Freddie Mac, the biggest
provider of housing finance in the United States, into buying more
than $200 billion in mortgage-backed securities.
Six institutions have since settled the accusations. GE and Citi
were the first two to resolve the claims in early 2013, but the FHFA
kept the terms confidential as they negotiated additional
settlements.
In October, JPMorgan agreed to pay $4 billion to resolve its
lawsuit, and in December, Deutsche Bank entered a $1.9 billion
accord with the agency.
A seventh bank, Wells Fargo, which the FHFA never formally sued,
also paid $335 million in November to resolve similar claims.
In total, the U.S. has recouped nearly $8 billion through the
settlements, the housing regulator said. The lawsuits accused the
firms of violating securities laws and in some cases, committing
fraud.
The settlements came as the institutions suffered a series of
disappointments in the litigation, failing to win dismissal of the
lawsuits, among other setbacks.
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The deals are expected to be reflected in financial statements for
Fannie and Freddie some time this year. If they wind up boosting
earnings, profits will go straight to the U.S. Treasury in the form
of dividend payments.
Fannie Mae and Freddie Mac, which currently back about half of
existing U.S. home loans, were seized by the government in 2008 as
mortgage losses mounted. They have received $187.5 billion in
taxpayer funds to stay afloat, while paying about $185.2 billion in
dividends to the government for that support.
The two taxpayer-owned mortgage finance firms have rebounded to
profitability as the housing market has recovered.
(Reporting by Margaret Chadbourn and
Aruna Viswanatha; editing by James Dalgleish and Bernadette Baum)
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