18 Institutional Investors In RMBS Issued By Citigroup Announce Binding Offer By Citigroup To Four RMBS Trustees To Settle Mortgage Repurchase Claims For 68 RMBS Trusts

FAQs

Q:

Who are the parties to the settlement?

A:

Citi has made a binding Offer to the RMBS Trustees of all of the RMBS Trusts listed on Exhibit "A."  The Trustees who have received the offer are:  Deutsche Bank National Trust Company, HSBC Bank USA, N.A., U.S. Bank N.A., and Wells Fargo Bank, N.A., and/or separate or successor trustees for the RMBS Trusts appointed pursuant to court orders confirming their appointment or otherwise appointed.  The Offer is being made pursuant to an agreement between Citi and the Institutional Investors. 

Q:

What Trusts are involved in the proposed settlement?

A:

There are 68 Trusts involved in the settlement.  They are listed on Exhibit "A." 

Q:

What was the role of the 18 Institutional Investors?

A:

The Institutional Investors, through their Steering Committee and their counsel, led the settlement negotiations.  The Institutional Investors did not negotiate on behalf of the Trustees and the Trustees were not parties to the negotiations that led to the Offer.  The Institutional Investors have requested that the Trustees enter into the settlement and will appear in court to support the settlement, should the Trustees elect to seek a judicial instruction concerning their decision to accept a settlement. 

Q:

Will the Institutional Investors benefit differently than other investors under the settlement?

A:

No, they will not.  Upon the latter of the Trustees' Acceptance or Final Court Approval, the Settlement Payment will be allocated by the Trustees' expert among the RMBS Trusts based on each Trust's then current and future expected collateral losses.  Each RMBS Trust's allocable share of the settlement payment will flow down its payment waterfall in accordance with the governing documents for that Trust.  The Institutional Investors will participate in the settlement, like every other investor, based on the terms of the payment waterfall. 

Q:

Will individual investors' securities claims be released in this settlement?

A:

No, they will not.  The settlement pertains only to the Trusts' repurchase claims.  The Offer states specifically that, "The releases and waivers in Article III do not include any direct individual claims for securities fraud or other alleged disclosure violations ("Disclosure Claims") that an Investor may seek to assert based upon such Investor's purchase or sale of Securities."  Citi has reserved the right to assert that any payment made or benefit conferred under the settlement constitutes an offset or credit against or a reduction in the gross amount of an Investor's Disclosure Claim damages. 

Q:

How will the Trustees assess whether to accept the Offer?

A:

The Trustees have until June 30, 2014 to conduct a reasonable investigation of the settlement and its terms.  They may request a forty-five day extension of this evaluation period under the terms of the Agreement. 

The Trustees may request documents or other information from Citi to conduct such diligence, may retain experts to assist them, and may conduct such other due diligence as they deem necessary to inform themselves concerning the Settlement.  Citi has agreed to use its reasonable best efforts to provide the Trustees promptly with the documents they reasonably require for their due diligence. 

Q:

Will the Trusts pay the costs of the Trustees' evaluation of the Settlement?

A:

No.  Pursuant to the Offer, Citi will pay all reasonable and non-duplicative costs, fees and expenses the Trustees incur to evaluate the settlement, the claims it resolves, and its terms.  This payment will be on top of, not out of, the $1.125 billion cash settlement payment. 

Q:

When and how will the settlement payment be distributed?

A:

The settlement payment will be distributed pursuant to a formula based on each accepting Trust's percentage share of total realized and unrealized losses.  The timing of payment is not certain, as it depends upon a number of factors including:  a) whether the Trustees accept the settlement, b) whether the Trustees elect to seek a judicial instruction concerning their decision to accept the settlement, and c) whether Final Court Approval, if sought, is granted. 

Q:

What is the allocation formula?

A:

The settlement agreement specifies that the Trustees will retain a single financial expert to determine the then current and future expected net losses that have been and are expected to be borne by that Trust from its inception to its expected date of termination as a percentage of the sum of all such losses that are expected to be borne by all of the RMBS Trusts over the same time period. 

Q:

How can interested investors learn more about the settlement?

A:

All investors will receive a notice from the relevant Trustee(s) concerning the settlement terms.  Information will also be available on a settlement-related website that will be created shortly.