Freddie Mac to recover $1.3 billion from Wells, Citi, and Suntrust

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 $1.3 billion.

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 reconciling adjustments. 

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 valued customers."

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.