Fannie Mae-No Politics (FNMA)

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Citigroup Ponies up $968 Million to Fannie Mae, What’s Next?

Motley Fool
July 10, 2013


What Settlement With Citi Means for Fannie Mae.

In general this deal allows Fannie Mae to cover another $1 billion or so in mortgage losses and shore up its balance sheet in the process. Moreover, the government-owned lender is currently negotiating other deals with the usual suspects involved in the mortgage market meltdown that triggered the financial crisis in 2008.

Citigroup and other big banks sold millions in mortgages to Fannie and Freddie Mac (NASDAQOTCBB: FMCC). The lenders then bundled the paper into tainted mortgage-backed securities. And this caused huge losses that ultimately were paid for by taxpayers.

In sum, this deal is good news for Fannie Mae as it continues to recover from the housing market collapse. Moreover this could be an opportunity for buyers interested in both common and preferred shares of both lenders.

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