Citigroup Pays $986 Million to Fannie Mae

by on Citigroup Foreclosures

Citibank Agency

When it comes to unethical lender actions, Bank of America definitely tops the chart. However, they are not the only bank that continues to be in hot water, even after foreclosure settlement agreements. Lenders ranging from Wells Fargo and HSBC to Citigroup are all still shelling out money as a result of mortgage issues that continue to plague the country.

During the real estate boom, Fannie Mae and Freddie Mac purchased loans from a variety of big banks, including Citigroup. Then, when these loans went bad, Fannie and Freddie ended up suffering the consequences and found themselves in a world of trouble. The U.S. government came to their rescue in order to keep them afloat.

Fannie Mae and Freddie Mac have decided to pursue major banks in search of financial retribution due to the belief that these banks knew that the loans were bad when they sold them. Specifically, they are requesting (demanding, rather) that each of the banks that knowingly sold them bad loans rebuy those loans to cut their losses.

Recently, Citigroup reached a $986 million agreement with Fannie Mae to resolve the issue, which has been pending for years. Although the agreement helps the bank financially, Citigroup will still be completely responsible for servicing the loans.

Fannie Mae already reached an $11.6 billion agreement with Bank of America regarding the same matter. Although these agreements are a win for Fannie and Freddie, they are still pursuing similar agreements with a variety of other banks that intentionally sold them bad loans.

SEC Urges Big Banks to Plead Guilty

Despite the plethora of legal actions and agreements involving lender unethical actions continue to surface, many believe that these banks are getting off lightly and obtaining insufficient punishment.

The SEC wants these banks to admit that they are guilty of wrongful actions instead of simply getting off with paying a fee (sometimes billions of dollars in fines) but without having to admit wrongdoing. A new policy is designed to do just that – have big banks like Citigroup actually admit fault as opposed to being able to get away with paying a fine and continuing to prosper without public recognition of wrongful actions.

At the end of the day, unethical actions continue to plague banks as well as homeowners and investors who have suffered the consequences of big bank actions over the years. Hopefully the new SEC policy will help hold these lenders accountable and require them to admit their guilt as opposed to being able to get away with a clean bill of health.