Mortgage finance giant Freddie Mac said Tuesday that three of the country’s largest banks — Wells Fargo, Citigroup and SunTrust Banks — had agreed to pay a total of $1.3 billion to resolve claims on millions of home loans that have soured or may go bad.
Freddie Mac, along with sibling Fannie Mae, has been seeking compensation from banks that it claims misrepresented the quality of home loans sold to it during the housing boom.
When the housing market crashed, homeowners defaulted on those loans en masse, saddling the mortgage finance companies with billions of dollars in losses.
“With these settlements, Freddie Mac is recouping funds effectively due to the nation’s taxpayers,” Donald H. Layton, chief executive of Freddie Mac, said in a statement. “We believe these settlements are equitable, and we are pleased to have resolved legacy repurchase issues with three of our valued customers.”