Citigroup has said that it has agreed to pay about $968 million to Fannie Mae to resolve claims on 3.7 million troubled home loans.

Fannie Mae has been seeking compensation from banks for misrepresenting the quality of home loans that were sold to the company during the times of the housing crisis. During the financial crisis, the housing market crashed and homeowners started defaulting on these loans and this resulted in Fannie facing billions of dollars in losses.

Jane Fraser, chief executive of CitiMortgage, said in a statement that, "We have a strong and productive relationship with Fannie Mae. As we work to deepen and enhance financial relationships with our clients, we will continue to focus on the production of high-quality mortgage loans."

The banking group said that the agreement would cover troubled loans and any potential future claims on mortgages that were made between 2000 and 2012 for the company. The banking group also said that the majority of the claims have been met by the fund but said that it would set aside an additional $245 million for claims.

A group of senators in the US congress are set to complete a plan to liquidate Fannie Mae and Freddie Mac (FMCC) and replace the failed bank with a government reinsurer of mortgage securities with private capital. The new plan would require private financiers to accept first-loss position for covering steep losses, according to the draft of the plan.