Freddie Mac has tentatively settled
three more claims with financial institutions over representations and
warranties related to single family loans. The agreements resolves claims against Wells
Fargo Bank, Citibank and CitiMortgage (collectively "Citigroup") and SunTrust
Mortgage and should result in a total recovery for the company of approximately
Under terms of the agreements,
announced on Tuesday, Freddie Mac will, with some limitations and exclusions,
release the companies from existing and future loan repurchase obligations for
specific populations of loans. The
payments also compensate Freddie Mac for certain past losses and potential
future losses arriving out of denials, cancellations, or other actions related
to private mortgage insurance.
The Wells Fargo settlement involves claims
against the bank regarding existing and future repurchase obligations for loans
funded by Freddie Mac prior to January 1, 2009 including approximately 6.7
million loans sold by the bank to Freddie Mac between 2000 and 2008. Wells Fargo has agreed to pay a total of $869
million less credits of $89 million for previous repurchases and for
The Citigroup settlement will result
in a payment to Freddie of $395 million less $43 million in credits for other
repurchases and adjustments. It releases
the bank from repurchase obligations for approximately 3.7 million loans funded
by Freddie Mac between 2000 and 2012.
SunTrust has agreed to pay Freddie
Mac a total of $65 million, less credits of $25 million as in the agreements
above. In return the company will
release the bank from repurchase obligations for approximately 312,000 loans
they funded between 2000 and 2008.
"With these settlements,
Freddie Mac is recouping funds effectively due to the nation's taxpayers,"
said Freddie Mac CEO Donald H. Layton. "We believe these settlements are equitable,
and we are pleased to have resolved legacy repurchase issues with three of our
All of the agreements were signed between
September 25 and September 30, 2013 and were approved by the Federal Housing
Finance Agency (FHFA) as Freddie Mac's conservator.