Citigroup paid $250 million to taxpayer-owned Fannie Mae and Freddie Mac to settle a lawsuit over soured mortgage securities. General Electric Co also paid $6.25 million to settle a similar suit, the Federal Housing Finance Agency said in a press release. Both Citi and GE previously settled the claims in 2013, but neither had disclosed the terms. Ally Financial Inc, the former parent of bankrupt Residential Capital LLC, paid $475 million. 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.
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.